Asia-Pacific industrial M&A bucking the trend: 2026 transaction volume expected to rise 2%, India and Southeast Asia become core of manufacturing relocation

Amid a general cooling of global industrial M&A activity, the Asia-Pacific region is emerging as a glimmer of light. According to PwC’s latest mid-year M&A outlook, transaction volume in the Asia-Pacific industrial and services sector is expected to grow 2% year-on-year in 2026, while the global figure is projected to decline 7% over the same period. This means Asia-Pacific is the only region expected to record positive growth.

The core driver behind this trend is the ongoing restructuring of manufacturing supply chains. As companies accelerate their "China+1" strategy, India and Southeast Asian countries—particularly Vietnam, Thailand, and Indonesia—are becoming primary destinations for manufacturing relocation. PwC notes that these markets will continue to attract investment, helping multinational enterprises diversify production risks and reduce reliance on single sources.

At the same time, Japan and South Korea remain active in deal-making, especially in areas involving automation, battery technology, and electronic components. These countries have deep industrial foundations and are strengthening their competitiveness in high-end manufacturing through M&A integration.

From a deal target perspective, assets related to artificial intelligence infrastructure, grid resilience, and automation are becoming focal points. Technologies such as robotics, industrial software, sensors, and interconnected systems—which enhance productivity and reduce reliance on labor—are widely seen as key to future growth. PwC expects that by 2030, the median proportion of highly automated processes among industrial manufacturers will jump from 18% to 50%, providing a clear direction for M&A in related fields.

In addition, corporate localization of production and supply chain restructuring are accelerating. To mitigate tariff impacts and secure access to key markets, many companies are divesting non-core assets while acquiring manufacturing operations with localized advantages in India and Southeast Asia. This strategy of "subtraction" alongside "addition" is creating abundant deal opportunities in the M&A market.

However, cross-border transactions still face uncertainty. Geopolitical tensions, fluctuating tariff policies, and changes in national industrial policies are prolonging deal completion timelines. PwC emphasizes that its 2026 projections are based on announced transaction data from the first five months of 2025, adjusted for reporting lags, and are intended only for year-on-year reference, not as precise financial forecasts.

Overall, the growth in Asia-Pacific industrial M&A is no accident. At the intersection of fading globalization and rising regionalization, capital is flowing in a more pragmatic manner toward nodes with higher efficiency and resilience. For investors, understanding this structural shift is more important than seizing short-term transaction windows.