For years, strategic buyers have shied away from India due to tricky tax codes surrounding the buying and selling of assets. This may soon change as the Indian government looks to ease the barrier to entry. Recently, French beauty products company L'Oréal SA (EPA: OR) became one of several corporate dealmakers looking to up their game in India. Consider the recent acquisition of Mumbai-based Cheryl's Cosmeceuticals.

The move boosts distribution across the world's seventh-largest country and coincides with L'Oréal setting aside roughly Rs.970 crore ($156.4 million) for research and M&A.

Other major companies are vying for Indian targets as well. Merger plans between phone companies MTN Group Ltd. (Nasdaq: MTNOY) and Reliance Communications Ltd. fell through in 2008. Now, the scenario is different as MTN looks to cut a deal once again with the Indian market maturing and companies becoming more familiar with modern M&A processes. Russian conglomerate Sistema JSFC is also looking at M&A opportunities. Sistema Shyam Teleservices Ltd.'s CEO Dmitry Shukov has said much of the deal opportunity in India hinges on clarity from the government's M&A rules.

This spike in interest comes after several changes were made to the government's 1950s Companies Act under the recently introduced Companies Bill 2012, which cleared its parliamentary hurdle in August. The Indian government hopes the bill can provide a much-needed jolt to economic growth, more transparency to transactions and spur more foreign investment, especially from U.S. buyers.

PE-backed deals, a major driver of M&A in the U.S., dropped 48 percent in India in 2013, according to Thomson Reuters data.

Strategic buyers are more active in India but remain challenged as well. Take the planned sale of Nokia Corp.'s (NYSE: NOK) handset business to Microsoft Corp. (Nasdaq: MSFT). The deal stalled in late September after Indian tax authorities froze many of Nokia's immovable assets such as buildings and facilities. The move on the part of the Indian Income Tax Department is meant to make sure the company has sufficient funds to pay an estimated 39.97 billion rupees ($635 million) tax bill. Microsoft has reason to worry because freezing these particular assets may chill the sale, since one of Nokia's largest manufacturing facilities are in India.

Microsoft isn't alone. Cadbury Enterprises pte Ltd., Royal Dutch Shell plc (NYSE:RDS.A) and General Electric Co. (NYSE: GE) are all navigating tax issues related to past deals and disputing notices from Indian income-tax officials seeking payment of back taxes.

With a new bill in place, strategic buyers and private equity firms alike may follow L'Oréal's lead and warm up to India as an M&A destination.

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