Scenario: a Vietnamese enterprise wants to acquire an operating pharmaceutical company in Hyderabad. India does not ask “what percentage may foreigners buy” in the abstract — it asks “which sector, which route”: automatic or government. Get this wrong and every timeline calculation is meaningless.
India: automatic vs government route — the sector decides the path
India’s FDI policy (administered through FEMA and the consolidated FDI policy) sorts sectors into two routes: the automatic route — no prior Government approval (reporting through RBI only); and the government route — prior approval required, for sensitive sectors or above sectoral foreign-equity caps. Acquiring an operating company means determining which route the target’s sector takes and the applicable cap — pharmaceuticals, telecoms and defence commonly hit the government route or low caps. This is the decisive screen, equivalent to Vietnam’s investment-registration gate but with finer sectoral sorting.
Merger control: the CCI and the deal-value threshold (2023)
The Competition Commission of India (CCI) requires mandatory pre-closing notification above asset/turnover thresholds. The notable update: the Competition (Amendment) Act 2023 added a deal value threshold (around INR 2,000 crore) — so high-value technology/pharma deals with small Indian assets or turnover (“killer acquisitions”) must now also file. A new trap many regional investors have not yet priced in.
Vietnam: capital-contribution registration plus concentration notification
In Vietnam, a foreign investor buying shares or stakes must complete registration of capital contribution, share or stake purchase under the Law on Investment 143/2025/QH15 (effective 1 March 2026, replacing Law 61/2020/QH14) in prescribed cases; register member/shareholder changes under the Enterprise Law 2020 (amended by Law 76/2025/QH15, effective 1 July 2025); and file the economic concentration notification under the Competition Law 23/2018/QH14 + Decree 35/2020/ND-CP above thresholds — all pre-closing, mirroring the CCI’s “notify first” principle.
Due diligence: India is hardest on tax legacy and labour
Indian DD carries a distinctive scar: the retrospective-tax legacy — past cases saw foreign investors assessed on indirect transfers (although retrospective application was repealed from 2021, legacy ownership structures still need screening); state-fragmented labour law and complex land title records. In Vietnam, DD typically snags on land, sub-licences and legacy tax — with less of India’s retrospective-style baggage.
Quick comparison
| Criterion | India | Vietnam |
|---|---|---|
| Foreign-investment approval | Automatic route (RBI reporting) vs government route (prior approval), by sector + equity caps | Registration of capital contribution/share purchase in prescribed cases (Law 143/2025) |
| Merger control | CCI: mandatory pre-closing notification; deal-value threshold since 2023 | Pre-closing concentration notification (Law 23/2018 + Decree 35/2020) |
| Capital-transfer tax | Capital gains tax; indirect-transfer rules were highly controversial — check the Vietnam–India treaty | Organisations: CIT (Law 67/2025/QH15 + Decree 320/2025/ND-CP); individuals: PIT |
| Typical closing timeline | 4–8 months; government route and CCI review are the two big variables | 1–3 months |
Recommended actions
1. Determine the automatic/government route and sectoral cap for the target’s sector at the outset. 2. Test the 2023 CCI deal-value threshold too, not just assets/turnover. 3. Tax DD must screen historic ownership structures (retrospective legacy). 4. Confirm every point of Indian law with local counsel.
Frequently Asked Questions
Does buying shares in India need investment approval like M&A in Vietnam?
India sorts by sector into two routes: the automatic route — no prior Government approval (RBI reporting only); the government route — prior approval required for sensitive sectors or above sectoral foreign-equity caps. Acquiring an operating company requires determining which route the target’s sector takes. In Vietnam, the corresponding gate is registration of capital contribution, share or stake purchase under the Law on Investment 143/2025.
What are India’s merger-control thresholds?
The CCI requires mandatory pre-closing notification above asset/turnover thresholds. Since the Competition (Amendment) Act 2023, a deal value threshold (around INR 2,000 crore) was added — high-value deals with small Indian assets must also file.
Which deals does the CCI’s 2023 deal-value threshold catch?
High-value deals with small Indian assets or turnover — typically technology, pharma and startups (“killer acquisitions”). A new development many regional investors have not yet factored in.
What is hardest in Indian due diligence compared with Vietnam?
The retrospective-tax legacy (past assessments on indirect transfers — retrospective application repealed from 2021, but legacy structures still need screening), state-fragmented labour law and complex land titles. In Vietnam, DD typically snags on land and sub-licences.
What tax applies on transferring shares in an Indian company?
Sellers face capital gains tax in India; the once-controversial indirect-transfer rules mean structures and the Vietnam–India double tax treaty need careful checking. In Vietnam, organisations pay CIT and individuals pay PIT.
How long does an Indian M&A deal usually take?
About 4–8 months; the two biggest variables are government-route approval (where the target’s sector requires it) and CCI review.
