A report from the Business Standard said merger and acquisition deals continued to go down this year as Indian entrepreneurs become more cautious with acquisitions. The prudence has been prompted by a slowdown in business growth, uncertainty in the macroeconomic environment and the instability of foreign exchange rate. The decline in M&A deals has also been caused by the wait-and-see mode of foreign investors due to the regulatory environment and the upcoming polls.

From January to November this year, M&A transactions that involved Indian firms numbered 708 for a total of $23.9 billion. This was significantly lesser as compared with last year's 904 M&A deals which reached $27.9 billion. In 2011, the number of deals was even bigger at 907 M&A transactions which amounted to $32.1 billion, the report said.

Meanwhile, outbound M&A deals in 2013 also dropped to 100 as compared to last year's 154. M&A transactions also fell in the domestic market this year with only 422 deals. In 2012, there were 504 deals. The value of domestic transactions also suffered a steep decline in the first 11 months of 2013, reaching only $3.8 billion as compared with last year's value of $14.5 billion.

The report quoted Head of M&A at Ernst & Young India and Partner-Transaction Advisory Services Ajay Arora, who said, "Outbound and domestic M&A deals have slowed down mainly because Indian entrepreneurs have been cautious acquirers of late. This is because of the slow growth in the Indian economy and the large debts on the books of Indian companies, which is shifting their focus more towards consolidation and debt reduction rather than growth through acquisition." He also said the devaluation experienced by the Indian currency have also made outbound M&A deals more costly compared to that in 2012.

However, the report stated that industry insiders and bankers are keeping their hopes up that by the second half of next year, inbound and domestic M&A transactions, including private equity deals will increase.