India to see healthy M&A activity driven by domestic deals: EY

Khandelwal further noted that the government's focus on reforms along with resilient capital markets and favourable credit environment should stimulate investments and encourage corporations to actively plan their acquisition strategy.

As per the report, Indian executives remain positive on M&A prospects in the country with 55 per cent of them expecting their companies to actively pursue M&A in the next 12 months.

Moreover, 64 per cent of survey respondents expect the local M&A market to improve further in the next 12 months.

Indian corporates are also positive on corporate earnings, equity valuations and credit availability, thus pointing to healthy deal market fundamentals.

Further, the deal closure expectations remain high with 74 per cent of Indian executives, almost twice the levels seen in last year, expecting an increase in the number of deal completions.

Indian respondents prefer the domestic market for M&A to tap growth opportunities. It ranks as the top destination of choice for Indian companies, followed by the US and UK. On the sector front, consumer products and retail and financial services are expected to remain active in the M&A market.

The other factors that are likely to boost M&A activity going forward are the emergence of disruptive pressures, such as technological innovation and digitisation as companies will be compelled to pro-actively acquire capabilities that provide a competitive edge, the report said.

"Digital disruption and sector convergence are expected to be the key deal drivers across sectors. We will see corporates adopting a more disciplined acquisition approach and exploring alternatives such as JVs/alliances for better capital and technical synergies," said Khandelwal.

The EY Global Capital Confidence Barometer is a biannual survey of over 1,600 senior executives from large companies around the world including 93 from India and across industry sectors.