Union Budget: Here is the wish list from Deal Street

With Budget 2026 knocking on our doors, we spoke to senior dealmakers on their wish list for Finance Minister Nirmala Sitharaman and her A-team to spur deal activity going ahead.

• 2025 saw major M&A deals with MUFG, Tata Motors, Emirates NBD, and Bajaj Group
• Dealmakers urge Budget 2026 to ease delisting, clarify Press Note 3, and cut taxes.
• Budget 2026 to boost M&A, infrastructure, manufacturing, and India-EU trade deal.

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2025 was a year jam-packed with multiple blockbuster deals.

Sample this.

Japanese major MUFG Bank’s $4.45 bn stake purchase in Shriram Finance, Tata Motor’s big-bang Europe push with the acquisition of Italy’s Iveco for $4.36 bn, the historic $3bn Emirates NBD-RBL Bank buyout, IT player Coforge scooping up US-based Encora in a $2.35 bn all-stock transaction and Bajaj Group ending its 24-year-old JV with Allianz by sealing a $2.38 bn insurance deal.

Will 2026 see a repeat of big, bold M&A action?

With Budget 2026 knocking on our doors, we spoke to senior dealmakers on their wish list for Finance Minister Nirmala Sitharaman and her A-team to spur deal activity going ahead.

Introducing greater flexibility for the delisting ( voluntary or involuntary removal of a listed security from the stock exchange) route is top on the list of Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas.

"There are a really large number of listed companies in India. Budget 2026 should make the delisting route easier in terms of process and pricing,” Shroff says.

Next, the ace dealmaker shifts to Press Note 3 or PN3 ( which requires the nod of the government for investments by investors from nations sharing a land border with India)

“The time is now right for PN3 to be lightened. The government should restrict PN3 to sensitive sectors and certain deal value thresholds. All other investments should come under the general FDI sectoral rules. This will provide an impetus to FDI and m&a from China, which is keen to invest overseas as its own market slows down,” Shroff explains.

Haigreve Khaitan, Senior Partner, Khaitan & Co agrees with Shroff.

“In the context of inbound M&A, greater clarity and calibration around the application of Press Note 3 would be particularly helpful, especially for minority, non-controlling investments and for financial sponsors with no governance or control rights. Clear comfort that minority holding or purely financial investments fall outside the approval requirement would materially reduce execution uncertainty without diluting the intent behind the introduction of Press Note 3,” Khaitan adds.

Investors love predictability and consistency, and Khaitan highlights a few areas which the Budget can address this year.

“Clearer and more business-friendly treatment of earn-outs, deferred consideration and complex cross-border structures, supported by consistent and predictable implementation, are equally important. Together, these measures would provide a stronger foundation for sustained inbound, outbound and domestic M&A activity than narrowly targeted fiscal incentives,” he says.

India's equity capital markets remained among the most active globally last year, with IPO activity delivering one of its strongest years, with issuers raising nearly $22 billion.

Can Budget 2026 sustain the momentum in capital markets deals amid a phase of geopolitical uncertainty, with FIIs and domestic MFs becoming cautious?

Khaitan is betting on credibility, clarity and depth.

He says, “Sustaining capital markets momentum in a risk-sensitive global environment will depend less on headline incentives and more on credibility, clarity and depth. A simpler and more competitive capital gains and securities transaction tax framework, through rationalisation of LTCG, STCG and/or STT, could materially enhance India’s relative attractiveness versus other emerging markets and help offset risk-off FPI behaviour. This is also a key theme seen ahead of the Budget.”

What do funds seek from Budget 2026?

Vivek Soni, Partner and National Leader – Private Equity Services at EY, also believes tax rationalization is the need of the hour.

“Rationalise LTCG rates and cess thereon to make India attractive from a returns point of view,” Soni says.

What more is the funds ecosystem seeking on the tax front?

“Taxation frameworks need to be harmonized to ensure parity and certainty across fund structures and investor classes, including SEBI and IFSCA-registered funds, with clarity on pass-through status, fair market value, indirect transfers, and safe harbour provisions,” Soni elaborates.

Funds are also looking forward to regulatory simplification for AIFs or alternate investment funds (Category I, II, and III) and enabling tax-neutral fund conversions.

Impact of the Tiger Global verdict

Many dealmakers feel Budget 2026 also presents a good opportunity for the government to soothe investor nerves which were rattled recently following a key judicial verdict.

Earlier this month, the apex court ruled that Tiger Global must cough up tax in India on the sale of its stake in Flipkart to Walmart in 2018. The decision overturned a Delhi High Court decision which allowed the US investment firm to claim tax relief under the India-Mauritius tax treaty.

According to a note by law firm Trilegal, “the Supreme Court’s decision requires holding companies to demonstrate commercial substance to claim capital gains tax benefits, overriding grandfathering provisions for investments made prior to April 1, 2017 in India’s tax treaties and the Income Tax Rules.”

Soni feels the government must clarify its position post the apex court judgement in the Tiger case to address investor uncertainty on how the income tax department will look at tax domicile and treaty benefits. “ This is important as investors are getting the feeling that anything can happen in India, upending precedents,” he tells Moneycontrol.

Lens on infra, manufacturing and India-EU deal

Rahul Mody, Co-Head of Investment Banking at Ambit Capital, is betting on m&a momentum continuing in 2026.

“India’s M&A deal volumes crossed $150 bn in 202,5 and we expect the momentum to continue this year.

The budget is expected to provide several measures, such as extension of support for manufacturing in a range of sectors, further tax and policy incentives for affordable housing, continued investments in the infrastructure sector, to name a few, which are expected to further drive M&A, private investment and asset recycling,” he says.

Finally, can the government continue the momentum post the India-EU free trade agreement, clinched after several years of negotiations?

“The budget should take advantage of mega trade deals like the India-EU deal. The PLI schemes should be enhanced to focus on more export-oriented manufacturing. This will boost manufacturing and job creation with assured market access to the EU,” Shroff signs off.