Industry Overview & Context: The Surge in Cross-border M&A and International Trade Laws

In 2025, cross-border mergers and acquisitions (M&A) are surging globally, with India emerging as a hub for e-commerce, logistics, and manufacturing deals. Indian firms are expanding into Southeast Asia, the EU, and North America, driven by a 97% year-on-year increase in manufacturing deal values in 2023 and high-profile transactions like the Reliance-Disney merger. This global push brings International Trade Laws into sharp focus, as they govern market access, tariffs, and compliance across jurisdictions.

The M&A value chain target identification, due diligence, deal structuring, and post-merger integration intersects with International Trade Laws at every phase. From verifying export compliance to aligning tariff codes post-merger, trade regulations shape deal success. Key Indian regulators, including the Directorate General of Foreign Trade (DGFT), Central Board of Indirect Taxes and Customs (CBIC), Reserve Bank of India (RBI), and Department for Promotion of Industry and Internal Trade (DPIIT), alongside international bodies like the World Trade Organisation (WTO), U.S. Trade Representative (USTR), EU Commission, and Office of Foreign Assets Control (OFAC), enforce stringent oversight.

Macro-trends reshaping the M&A landscape include:

• Tariff and Origin Scrutiny: Increased focus on Harmonised System (HS) codes and country-of-origin rules impacts valuations and logistics.
• Sectoral FDI Caps: Restrictions in sectors like insurance (74% cap) and defense necessitate creative structuring.
• E-commerce Compliance: The Digital Personal Data Protection Act (DPDP) and digital export regimes demand robust data compliance.
• Regionalised Supply Chains: Post-pandemic shifts amplify legal risks from non-compliance with International Trade Laws.

Recent Developments Impacting Cross-border M&A and International Trade Laws (June 2025)

Recent regulatory shifts highlight the critical role of International Trade Laws:

• India-EU Trade Deal: Finalised in 2025, it introduced digital trade norms, tariff rationalisation for e-commerce and manufacturing, and IP alignment, necessitating enhanced due diligence.
• DPDP Compliance: The DPDP Act, alongside the IT Act, regulates cross-border data transfers, limiting buyer access to sensitive data during integration and requiring robust e-commerce compliance.
• US-China Trade Spillover: Indian tech and manufacturing firms face secondary sanctions risks, impacting deal valuations and requiring denied party screenings.
• CBIC Customs Audits: New circulars intensify post-merger audits, with retrospective tariff recalculations based on post-M&A valuations, increasing legal risks.
• WTO Compliance: Sectors flagged for anti-competitive M&A or dumping require pre-closure clearance to align with International Trade Laws.
• Budget 2025 Provisions: Relaxed FDI norms in banking, insurance, and defense, streamlined import duties, recalibrated export incentives, and customs harmonisation facilitate M&A but demand compliance with International Trade Laws.

1. Key Challenges & Nuances in Cross-border M&A

Navigating International Trade Laws presents significant challenges:

• Trade Regulation Mismatch: Overlapping or contradictory International Trade Laws across jurisdictions (e.g., EU’s GDPR vs. India’s DPDP) delay clearances.
• Tariff Exposure: Post-merger HS code shifts can trigger import duty hikes or loss of export incentives, impacting financial projections.
• Legal Risks in Disclosure: Targets may under-report non-compliant exports, sanctioned dealings, or IP violations, exposing acquirers to penalties.
• E-commerce Compliance Gaps: Cross-border e-commerce acquisitions often miss country-specific digital trade norms, such as data localisation.
• Regulatory Silos: Fragmented oversight from DGFT, CBIC, RBI, and DPIIT complicates M&A timelines, especially for tech and B2B platforms.

2. Strategic Implications: A Hybrid Consulting Approach

M&A Due Diligence Strategy

Expand due diligence to include:

• International Trade Law Reviews: Scrutinise export/import trails, country-of-origin documentation, and compliance with WTO, USTR, and EU regulations.
• E-commerce Compliance: Validate adherence to DPDP, GST, and cross-border data flows for e-commerce targets.
• Denied Party Screening: Use AI-driven tools to identify sanctioned entities, critical for tech and manufacturing deals.
• Data Export Risks: Assess cross-border data-sharing protocols to ensure compliance with International Trade Laws.

Deal Structuring & Valuation

Customise deal structures to mitigate risks:

• Valuation Adjustments: Account for tariff-linked cost shifts, customs liabilities, or restricted licenses in financial models.
• Deferred Payouts: Use indemnity escrows or phased buyouts tied to e-commerce compliance or trade audit outcomes.
• Hybrid Models: Partial buyouts or joint ventures reduce exposure to sudden shifts in International Trade Laws.

Integration Playbook

Prioritise trade compliance post-merger:

• Trade Compliance Task Forces: Establish teams to align entities with International Trade Laws on Day 1.
• System Harmonisation: Integrate ERP, customs, and logistics systems for consistent HS code classification.
• Real-time Trade Controls: Deploy AI-driven HS code validation, duty optimisation tools, and automated DGFT license monitoring.

Legal & Regulatory Strategy

Proactively manage compliance:

• Pre-closure Checklist: Align deals with International Trade Laws, export controls, tariffs, and FDI caps.
• Compliance Dashboard: Maintain alerts for trade license expiries, port-specific norms, and data movement restrictions.
• Regulator Outreach: Engage CBIC, DGFT, and global bodies to streamline asset transfers and IP re-registration.

Illustrative Examples

• Cross-border E-commerce M&A

An Indian logistics firm acquired a Southeast Asia-based B2B e-commerce platform. Due diligence revealed import duty discrepancies on bundled SKUs. Legal and finance teams modelled a $3 million duty fallout and restructured the deal as a phased buyout. Post-acquisition, the tech team implemented AI-driven tariff classification, and the legal team secured customs clearance under revised HS codes, ensuring compliance with International Trade Laws and avoiding penalties.

• Trade Regulation-Driven Restructuring

A U.S. conglomerate acquired the Indian arm of a European manufacturing MNC. The deal triggered U.S. dual-use export scrutiny. To comply with International Trade Laws, restricted product lines were carved out into a separate Indian joint venture, securing OFAC approval without triggering sanctions.

Conclusion: Embedding International Trade Laws in M&A Strategy

Integrating International Trade Laws into every phase of cross-border M&A from due diligence to integration is critical. Senior leaders must leverage legal foresight, technology-driven compliance, and strategic structuring to mitigate tariff exposure, legal risks, and regulatory delays. Embedding trade governance into M&A playbooks ensures sustainable global growth in an increasingly regulated landscape. Are your M&A strategies customised to navigate the complexities of International Trade Laws

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