Nordic Companies Acquiring Indian Firms: Clean Energy, Tech & DTAA

Why Nordic Companies Are Targeting Indian Acquisitions

Trade between India and the Nordic countries (Sweden, Denmark, Norway, Finland, and Iceland) has grown steadily over the past decade. Companies like Ericsson, Nokia, Volvo, Vestas, Maersk, and Wartsila have long maintained operations in India, but the relationship is shifting from operational presence to strategic acquisitions. India hosts over 1,700 Global Capability Centres (GCCs), per Nasscom's count, and Nordic enterprises now operate significant R&D, engineering, and innovation hubs across Bengaluru, Chennai, Gurugram, and Pune.

Three sectors drive Nordic acquisition interest in India: clean energy (where Scandinavian expertise in wind, solar, and hydrogen aligns with India's 500 GW non-fossil capacity target by 2030), technology (where Indian firms offer talent density at scale), and advanced manufacturing (where FDI liberalisation and PLI incentives create compelling unit economics). India permits 100% FDI under the automatic route in the renewable energy sector, making acquisitions in clean energy straightforward from a regulatory perspective.

This guide covers the complete acquisition framework for Nordic companies: DTAA tax rates for each Nordic country, sector-specific FDI rules, CCI merger approval requirements, FEMA compliance, and post-acquisition integration considerations unique to the Nordic-India corridor.

DTAA Tax Rates: Sweden, Denmark, Norway & Finland

India has signed Double Taxation Avoidance Agreements with all four major Nordic countries. These treaties reduce withholding taxes on cross-border payments and provide relief from double taxation. Understanding the specific rates for each country is critical for structuring the acquisition and modelling post-acquisition cash flows.

India-Sweden DTAA

The India-Sweden DTAA, signed in 1997 (a 2013 protocol updated only the information-exchange article), provides the following withholding tax rates:

Sweden's treaty is among the most favourable for Nordic acquirers. The uniform 10% rate across all passive income types simplifies tax planning significantly compared to treaties with tiered rates. Swedish companies like Ericsson (R&D centres in Bengaluru, Chennai, and Gurugram) and Volvo (manufacturing in Bengaluru) already leverage these rates for intercompany royalty and technology fee payments.

India-Denmark DTAA

Denmark's treaty with India, signed in 1989 (its 2013 amending protocol, in force from 2015, updated only the information-exchange article), has notably higher rates for royalties and FTS:

The Denmark treaty's 20% rate on royalties and FTS offers no benefit over domestic rates, and for portfolio dividends the treaty's 25% rate exceeds India's 20% domestic rate — the taxpayer simply applies the more beneficial domestic provision in those cases. Danish companies like Vestas (wind turbine R&D in Chennai) and Maersk (logistics operations across India) should structure intercompany payments carefully. Technical service fees may be better structured as management fees or cost-sharing arrangements to optimise the tax position. Consult a cross-border tax advisor before finalising payment structures.

India-Norway DTAA

Norway's treaty mirrors Sweden's favourable 10% uniform rate. Norwegian companies in energy, shipping, and maritime technology benefit significantly from these reduced withholding rates.

India-Finland DTAA

Finland's treaty also provides a uniform 10% rate. Finnish companies like Nokia (a major R&D centre in Bengaluru and a manufacturing plant near Chennai) and Wartsila (marine and energy solutions) benefit from straightforward tax planning under this treaty.

To claim DTAA benefits, the Nordic parent must obtain a Tax Residency Certificate (TRC) from its home country tax authority and furnish it to the Indian entity along with Form 41 (formerly Form 10F). For each cross-border remittance, the Indian payer files Form 145 (formerly Form 15CA), adding a chartered accountant's certificate in Form 146 (formerly Form 15CB) where the taxable remittance exceeds INR 5 lakh.

Clean Energy Acquisitions: FDI Framework

India's renewable energy sector is a primary target for Nordic acquirers. The sector has attracted over USD 21 billion in cumulative FDI between April 2000 and March 2025, per DPIIT's FDI statistics. It permits 100% FDI under the automatic route for generation and distribution, meaning no prior government approval is required.

Why Nordic Companies Have a Strategic Edge

The Nordic countries are global leaders in clean energy. Denmark's Vestas is one of the world's largest wind turbine manufacturers. Sweden's Vattenfall is one of Europe's largest energy producers. Norway leads in hydropower and offshore wind. Finland's Fortum is one of the Nordic region's largest power generators. These companies bring technology, operational expertise, and capital that Indian clean energy firms need to scale.

India's target of 500 GW non-fossil fuel capacity by 2030 (installed non-fossil capacity crossed 300 GW by July 2026, per MNRE data) creates massive acquisition opportunities. Wind energy capacity has nearly tripled from 21 GW in 2014 to 58.1 GW by July 2026 (MNRE data), and the CEA's optimal generation capacity mix report projects 99.9 GW by 2029-30. Solar capacity additions are even more aggressive.

Government Incentives for Clean Energy

Beyond 100% FDI, the government offers several incentives relevant to Nordic acquirers:

• PLI for Solar PV Modules: A INR 24,000 crore scheme for high-efficiency solar PV module manufacturing, with higher incentives for vertically integrated manufacturers (polysilicon to modules)
• Accelerated Depreciation: Up to 40% accelerated depreciation on wind and solar assets
• Viability Gap Funding (VGF): For offshore wind and green hydrogen projects
• ISTS Waiver: Inter-State Transmission System charges were waived in full for solar and wind projects commissioned up to June 30, 2025, with the waiver phasing down for later projects
• Tax Holiday (legacy): the deduction of 100% of profits for any 10 consecutive years out of the first 15 under section 138 of the Income-tax Act, 2025 (section 80-IA of the Income-tax Act, 1961) was available only to power undertakings that commenced generation by March 31, 2017 — an acquired entity may still be running out its remaining window, but new projects cannot claim it

Nordic companies acquiring Indian renewable energy firms inherit these incentives, provided the acquired entity maintains its existing project approvals and Power Purchase Agreements (PPAs). Due diligence must verify that all regulatory approvals, environmental clearances, and grid connectivity agreements transfer with the acquisition.

Technology Acquisitions: GCC and IT Services

Nordic companies are rapidly expanding their Global Capability Centres in India. Ericsson develops 5G solutions from its Indian R&D centres in Bengaluru, Chennai, and Gurugram, including through collaborations with Indian universities. Nokia's Bengaluru R&D operations contribute patents and technology standards work. These GCC operations increasingly evolve into acquisition targets or platforms for bolt-on acquisitions of Indian tech firms.

FDI Rules for Technology

IT and ITeS sectors permit 100% FDI under the automatic route. No sectoral caps or conditions apply. The acquisition process for technology companies is among the most straightforward in India, with the primary regulatory requirements being:

• FC-TRS filing within 60 days of share transfer
• CCI notification if thresholds are crossed
• Valuation certified by a chartered accountant, a SEBI-registered merchant banker, or a practising cost accountant
• Compliance with FEMA pricing guidelines (transfer price cannot be below fair market value)

Key Due Diligence Considerations for Tech Targets

Nordic companies acquiring Indian technology firms should focus their due diligence on intellectual property ownership (ensure all IP is properly assigned to the company, not retained by founders or employees), employee non-compete enforceability (Indian courts generally disfavour post-employment non-competes), customer contract assignability (verify change-of-control provisions), and data protection compliance under the Digital Personal Data Protection Act 2023 (the DPDP Act exempts personal data processing for court-approved schemes of merger, but buyer-side assessment is still prudent).

CCI Merger Approval for Nordic Acquirers

The Competition Commission of India (CCI) must approve the acquisition if specific thresholds are triggered. Since September 2024, India has implemented a Deal Value Threshold alongside traditional asset/turnover thresholds:

A de minimis (small-target) exemption shields transactions under the asset/turnover tests where the target's assets in India do not exceed INR 450 crore or its turnover in India does not exceed INR 1,250 crore — but this exemption does not switch off the Deal Value Threshold. Substantial business operations in India are defined under the CCI's 2024 combination rules: for digital services, one-tenth or more of the target's global users, subscribers, customers or visitors are in India; otherwise, the target's gross merchandise value or turnover in India is at least 10% of its global figure and exceeds INR 500 crore.

The CCI review timeline has been reduced from 210 days to 150 days. Form I (short form) filings are typically approved in 7-10 weeks. A green channel route provides automatic (deemed) approval for transactions that do not raise horizontal, vertical, or complementary overlap concerns. Most clean energy and technology acquisitions by Nordic companies qualify for the green channel or receive Phase I clearance within 30-45 days.

FEMA Compliance and Post-Closing Filings

Every acquisition by a Nordic company must comply with FEMA regulations. The critical compliance requirements include:

Pricing Guidelines

When acquiring shares from an Indian resident, the price must not be below the fair market value determined under an internationally accepted pricing methodology (DCF, comparable transaction multiples, or similar), duly certified by a chartered accountant, a SEBI-registered merchant banker, or a practising cost accountant. The valuation must be no more than 90 days old at the time of transaction.

Post-Closing Filings

Late filing penalties are significant. Missing the FC-TRS deadline is regularised first by paying the Late Submission Fee — INR 7,500 plus 0.025% of the amount involved for each year of delay, available for up to three years from the due date — with compounding only beyond that window, and repeated non-compliance can result in adjudication proceedings. Nordic companies should engage a specialist FEMA compliance advisor to handle all post-closing regulatory filings.

Transfer Pricing Documentation

Post-acquisition, all intercompany transactions between the Nordic parent and Indian subsidiary must be documented at arm's length prices. This includes management fees, royalties, technology licensing fees, cost-sharing arrangements, and intercompany loans. Nordic companies whose Indian subsidiaries have significant recurring international transactions should evaluate Advance Pricing Agreements to eliminate transfer pricing audit risk. India's APA programme accepts bilateral applications involving treaty partners, including the Nordic countries.

Corporate Tax Rates for Nordic-Owned Subsidiaries

A critical planning factor for Nordic acquirers is understanding India's corporate tax structure for the acquired entity post-acquisition. The Indian subsidiary (being a domestic company incorporated in India) can opt for one of the following regimes:

Most Nordic acquirers opt for the concessional 25.17% rate under section 200 read with section 205(1) of the Income-tax Act, 2025 (section 115BAA of the Income-tax Act, 1961), which requires forgoing deductions and exemptions under various sections (including the section 138 power generation benefits described above). The choice between 115BAA and the standard regime requires detailed modelling based on the acquired company's existing tax attributes, carried forward losses, and available deductions.

For new manufacturing subsidiaries set up and commencing production on or before March 31, 2024, the 15% rate under section 201 (Table, Sl. No. 1) read with section 205(2) of the Income-tax Act, 2025 (section 115BAB of the Income-tax Act, 1961) yields an effective rate of just 17.16%, making India one of the most tax-competitive manufacturing jurisdictions globally. However, this rate is only available for companies engaged exclusively in manufacturing and not claiming specified deductions.

Minimum Alternate Tax (MAT) at 15% of book profits applies to companies under the standard regime but not to those opting for 115BAA or 115BAB. Nordic companies acquiring entities with significant book profits but low taxable income should evaluate MAT implications carefully.

Structuring the Acquisition: Direct vs. Holding Company

Nordic acquirers must decide whether to acquire the Indian target directly from the Nordic parent entity or through an intermediate holding company (commonly in Singapore, Netherlands, or Luxembourg). Each structure has different tax implications:

Direct Acquisition from Nordic Parent

• Simpler structure with fewer compliance layers
• DTAA benefits available at 10% (Sweden, Norway, Finland) or higher (Denmark)
• Capital gains treatment on an eventual exit differs by treaty: India can tax share gains under the Norway and Finland treaties and, for holdings of 10% or more, under the Denmark treaty, while the Sweden treaty generally reserves gains on shares (other than shares of land-rich companies) to Sweden provided the gains are subject to tax there

Acquisition Through Intermediate Holding Company

• The India-Singapore DTAA and India-Netherlands DTAA may offer more favourable capital gains treatment in certain scenarios
• However, the Multilateral Instrument (MLI) and Limitation of Benefits (LOB) clauses have significantly curtailed treaty shopping. India has adopted the Principal Purpose Test (PPT) under the MLI, meaning shell companies without genuine economic substance will not receive treaty benefits
• Additional compliance burden: transfer pricing for the intermediate entity, substance requirements, and anti-avoidance rules (GAAR)

For most Nordic companies with genuine business rationale, direct acquisition from the Nordic parent is the simplest and most defensible structure. The 10% withholding rate under the Sweden, Norway, and Finland DTAAs is already competitive with Singapore's rates.

Press Note 3: No Restriction for Nordic Companies

India's Press Note 3 (2020) restricts FDI from countries sharing a land border with India (China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan). All such investments require prior government approval, regardless of the sector or FDI route. Nordic countries (Sweden, Denmark, Norway, Finland, Iceland) are not affected by Press Note 3. Nordic acquirers can invest freely under the automatic route without the additional government approval layer that Chinese, Pakistani, or Bangladeshi investors face. This regulatory clarity gives Nordic companies a competitive advantage when bidding against Chinese firms for Indian acquisition targets, particularly in technology and clean energy sectors where Chinese investment faces the longest government approval timelines.

Sector-Specific Considerations

Wind Energy

Denmark and Norway lead in offshore and onshore wind technology. Indian wind capacity stands at 58.1 GW (MNRE, July 2026), and the CEA's optimal generation capacity mix report for 2029-30 projects 99.9 GW. Acquisitions of Indian wind farm developers, EPC contractors, and turbine component manufacturers are under the automatic route with 100% FDI permitted. Key due diligence items include PPA terms (duration, tariff escalation), grid connectivity agreements, land title (many wind farm sites have complex land acquisition histories), and environmental clearances.

Solar Manufacturing

India's PLI scheme for solar PV modules (INR 24,000 crore) incentivises vertically integrated manufacturing from polysilicon to modules. India's solar manufacturing capacity has scaled rapidly at the module and cell stages, while upstream wafer and polysilicon capacity is still being built out. Nordic acquirers targeting solar manufacturing firms should verify PLI eligibility, domestic value addition commitments, and whether the target's PLI benefits transfer with the acquisition.

Electric Vehicles and Batteries

The PLI for Advanced Chemistry Cell (ACC) batteries requires a minimum 60% domestic value addition within 5 years. Nordic EV and battery technology companies acquiring Indian targets in this space must plan for localisation timelines and ensure the acquired entity's existing commitments to domestic sourcing are met.

Key Takeaways

• Sweden, Norway, and Finland DTAAs offer a uniform 10% withholding rate on dividends, interest, royalties, and FTS; Denmark's treaty has higher rates (20% on royalties and FTS) requiring careful payment structuring
• Clean energy permits 100% FDI under the automatic route with no prior approval, and the sector has attracted over USD 21 billion in cumulative FDI (April 2000 to March 2025, per DPIIT)
• CCI merger notification is required if deal value exceeds INR 2,000 crore (where the target has substantial Indian operations) or the asset/turnover thresholds are crossed; review takes 30-150 days
• Direct acquisition from the Nordic parent is typically the most efficient structure; intermediate holding companies face MLI and GAAR scrutiny
• Post-closing compliance is critical: FC-TRS within 60 days, FLA Return by July 15, and transfer pricing documentation for all intercompany transactions