India's rapid economic growth over the past decade has been significantly driven by high-growth startups supported by private equity and venture capital investments. However, the current merger control framework established by the Competition Commission of India (CCI) requires pre-closing approval for financial sponsor-led deals that meet specific financial thresholds. In 2024 and 2025, nearly half of all merger filings were related to such transactions. This regulatory environment often compels investors to waive essential governance rights to expedite deal timelines, potentially compromising long-term governance and investor protection.

A proposed solution suggests that the CCI could implement a model where the principles of inter-connection are suspended for transactions involving solely financial investments. This would allow investors to proceed with exempt portions of their investments while awaiting CCI approval for the remaining parts. By consolidating all rights in a single instrument, the proposal aims to enhance certainty and confidence among stakeholders while allowing the CCI to maintain oversight of competitive risks.

Ultimately, refining the inter-connection principle could strengthen corporate governance in India without undermining the competitive landscape, aligning with the country's broader commitment to improving the ease of doing business.