This article originally appeared on Livemint.

In the 25 years since liberalization, Indian companies have consistently directed their gaze at the global business stage. The top 10 business groups in India have experienced an average increase of about 26 percentage points in their share of international revenue in the last 10 years, the most noteworthy being Tata Motors Ltd, Hindalco Industries Ltd and Tata Steel Ltd. Many big firms in India earn more than two-thirds of their revenues from abroad.

India Inc. flexes its M&A muscle in the global arena

India Inc.’s appetite for acquisitions is reflected in the nearly 2,000 outbound merger and acquisition (M&A) deals since liberalization in 1991. From the golden years of 2005–2007, replete with blockbuster deals totalling nearly $41 billion, to a more cautious approach in the recent post-recession era, Indian firms have shown a keenness for overseas acquisitions.

After decades of limited activity, a solidly performing domestic sector, fuelled by the reforms, catalysed Indian firms’ dormant ambition to establish a multinational presence.

The government increased the outbound investment cap from $15 million in 1999 to four times a company’s net worth in 2007, while also permitting companies to invest in unrelated businesses.

Another key factor was the availability of cheap finance as base interest rates fell. Debt financing for outbound deals was eased, and permission to use external commercial borrowing granted from 2005 onwards. During 2003–2007, domestic businesses grew much faster (at nearly 20-25%) than the gross domestic product (GDP), and profit after tax grew at a staggering 41%. Armed with sizeable cash reserves and hungry to make acquisitions in new markets, India firms went through a phase of intense cross-border expansion. During the high-octane period of 2005-2007, Indian companies concluded a string of large deals, among them the nearly $13 billion Tata-Corus tie-up and Hindalco’s nearly $6 billion acquisition of Novelis Inc. This period was marked by outbound M&A galloping at a brisk compounded annual growth rate of 130%.

Read the full article at Livemint.

Sri Rajan is chairman, Bain & Co., India. Shyam Unnikrishnan is a manager in the firm and a member of the Strategy and Consumer Products and Retail practices in India.