The Competition (Minimum Value of Assets or Turnover) Rules, 2024

The small target exemption keeps transactions involving small Indian businesses out of merger control even where the acquirer is very large. It began as a notification issued from time to time for limited periods, the figures being revised on 7 March 2024 to four hundred and fifty crore rupees of assets or one thousand two hundred and fifty crore rupees of turnover. These rules, notified in September 2024 and effective from 10 September 2024, codify that exemption. Their most important feature is what they do not cover: the exemption does not apply to a transaction caught by the deal value threshold.

1. The Exemption

An acquisition, merger or amalgamation is exempt from the requirement of notification where the enterprise being acquired, taken control of, merged or amalgamated has assets in India of not more than four hundred and fifty crore rupees, or turnover in India of not more than one thousand two hundred and fifty crore rupees, in the financial year preceding the transaction.

The test is applied to the target alone, not to the parties combined, which is the point of the exemption: the size of the acquirer is irrelevant because a very small target cannot change the structure of an Indian market.
The figures are Indian, being assets located in India and turnover derived from India, so a target with large operations abroad and small ones here is within the exemption.
The test is disjunctive. Satisfying either limb suffices.
In an asset or business acquisition the figures are computed by reference to the business or division being acquired rather than to the whole of the seller.

2. The Relationship with the Deal Value Threshold

This is the provision that makes the rules worth a separate note. The exemption does not apply to a transaction that crosses the deal value threshold in Section 5(d), that is a transaction whose value exceeds two thousand crore rupees where the target has substantial business operations in India. The reason is that the two provisions measure different things and would otherwise cancel each other out: the exemption measures the target by its assets and turnover, and the deal value threshold exists precisely because those figures understate the competitive significance of a digital or technology target. A young enterprise with millions of Indian users, negligible revenue and few assets, bought for several thousand crore rupees, is exactly the transaction the exemption would have removed from review and the threshold was introduced to capture.

⚠ How to answer a threshold question in the right order

First ask whether the asset or turnover thresholds in Section 5(a) to (c) are crossed. Second ask whether the deal value threshold in Section 5(d) applies, which requires both a transaction value above two thousand crore rupees and substantial business operations in India. Third, if only the first is crossed, ask whether the small target exemption applies, and if it does the transaction is not notifiable. Fourth, if the deal value threshold applies, stop: the exemption is unavailable and the transaction must be notified whatever the target's assets and turnover.

3. Related Topics and Provisions

Topic or provision	Connection
Regulation of Combinations: Sections 5 and 6	The thresholds and the notification obligation
The Deal Value Threshold	The provision that displaces this exemption
The Competition (Criteria for Exemption of Combinations) Rules, 2024	Exemptions resting on the character of the transaction rather than the size of the target
Sections 5 and 6, Competition Act, 2002	The statutory basis