India has seen 433 mergers and acquisitions (M&A) so far this year, up from just 57 during the same months of last year, according to a consultancy firm.

We will relinquish government involvement in production and raise resources for development of our social sector

Prime Minister Atal Behari Vajpayee

The value of the Indian deals doubled to 362bn rupees (�4.8bn; $7.4bn) during the six months to 30 June from 168bn rupees a year earlier, India Advisory Partners (IAP) estimated.

The sharp rise in M&A activity was driven by changes to regulations and by a mass sell-off of state owned assets, IAP said.

The rise in India coincided with a 35% fall in global M&A activities.

So while in the rest of the world most major investment banks have reduced their M&A teams, in India they have instead seen fees rise.

Critical mass

In recent months, a slew of Indian markets have been deregulated and foreign companies have been allowed to come in and compete.

This has sparked a desperate scramble for partners or acquisition targets by incumbent firms.

They fear that unless they grow quickly to be large enough to fend off global giants they could well become takeover targets in their own right.

The deregulation of India's $65bn energy market is a case in point.

In March, India's largest private conglomerate, Reliance Group, merged its Reliance Industries and Reliance Petroleum into one integrated energy giant which could hold its own against global rivals such as Royal-Dutch Shell.

In the banking sector, ICICI Bank gobbled up its parent companyI following the deregulation of the financial services sector.

Still growing

The M&A activity in India is set to continue to grow well into 2003 at the very least, observers predicted.

The government aims to push ahead with the privatisation of state enterprises to the tune of 120bn rupees by the end of March.

"We will relinquish government involvement in production and raise resources for development of our social sector," Prime Minister Atal Behari Vajpayee said in a speech on Wednesday.

The government aims to sell both its National Aluminium Company and Shipping Corporation of India, the country's largest shipping company, this year.

Last year, the same 120bn rupees goal was set, though the government managed to raise only half that amoung.

This was partly because Indian trade unions mounted protests against some privatisation plans.

The resistance has faded in recent months, in part, said some observers, because of reduced job security.

The Prime Minister is trying to push through legislation that will make it easier for companies to fire workers at will, and to cut costs.