MUMBAI—India is having its busiest year ever for corporate deal making, as foreign buyers are now spending more here than in China.

Companies and investors alike are betting the world’s fastest-growing large economy—once seen as bureaucratically sclerotic and unpredictable—is turning into a destination that offers opportunity driven by hundreds of millions of consumers. Other deal drivers include industry consolidation, a better bankruptcy system and a growing willingness among owners of large family businesses to cash out.

...