A recent series of takeovers by Indian firms of foreign businesses has been fuelled by the availability of cheap loans from international banks.

Low levels of inflation on loans from banks have allowed Indian business to pursue a model of rapid expansion in foreign sectors. Banks including Citigroup, Deutsche Bank and Standard Chartered have all moved to provide loans to Indian businesses, in a move that buckles the trend set in 2012 of moving away from providing loans to the country during the economic slump.

Examples of the level of foreign investment in India can be seen in the acquisition of American based Cooper Tire & Rubber Co, by the much smaller Apollo Tyres Ltd for $2.5 billion, with investment from the banking sector funding the purchase outright.

With expectations of a global financial recovery, Indian businesses are moving to capitalise on the future growth potential of foreign business. Foreign investment has become more important for long term expansion as the domestic market slows and the Indian economy begins to slow.

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