Opinion Ishan Bakshi writes: The Indian economy, across sectors, is dominated by duopolies
Considering that across a range of goods and services, markets in India are now oligopolistic at best, duopolistic at worst, this growing concentration, national champions or not, warrants careful examination
This concentration of ownership in the hands of a few is not just limited to sectors more tightly regulated by the government. It is more widespread, even in the seemingly more competitive areas. (File) 
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Markets in India are increasingly being dominated by a handful of firms. But, contrary to the widely-held belief, it is not just a few large domestic players who hold considerable sway. Across vast tracts of the Indian economy, foreign firms exercise significant control. This concentration of ownership in the hands of a few is not just limited to sectors more tightly regulated by the government. It is more widespread, even in the seemingly more competitive areas.
Take for instance manufactured products. The automobile sector in India is dominated by Maruti Suzuki and Hyundai. Both are foreign-owned. Together, the two account for roughly six out of every 10 cars sold in the country. Add Tata Motors, the biggest Indian auto player, and these three players control almost 70 per cent of the total car market. While several other smaller players do exist, with the exception of Mahindra which ranks fourth in terms of market share, the others are foreign firms.
A similar scenario exists in the two-wheelers segment. Three players — Hero MotoCorp, Honda and TVS Motor — account for nearly three-fourths of the total market. Two of these – Hero and TVS – are Indian-owned while Honda is a subsidiary of a Japanese firm. Except for Bajaj Auto, the other players are simply too small to offer any meaningful competition.
This concentration of ownership can also be observed in the gadgets segment. For example, the mobile phone market in India is dominated by the Chinese brands Xiaomi, Vivo and Realme, and the South Korean giant Samsung. Vivo, Realme, Oneplus and Oppo are reportedly linked to the same Chinese company. Together these companies controlled roughly 70 per cent of the market in 2022. The smart TV market is similarly dominated by the likes of Xiaomi, Samsung and LG. Similar patterns can be observed in other consumer appliance markets as well as in various segments of the FMCG market.
Unlike these consumer-facing segments where foreign players hold considerable sway, Indian players exercise more control in the core infrastructure sectors. For instance, in steel, the four biggest companies — JSW Steel, SAIL, Tata Steel and JSPL — control more than half the market. Three of these are domestic private-sector firms, while one is a public-sector enterprise. Similarly, the four biggest Indian cement firms command half of the market share in the country. Such examples of market concentration can also be seen in other segments, especially in certain commodities and related segments.
Obviously, the lines of demarcation between foreign and domestic players across markets are not exactly neat — there are examples of companies such as Asian Paints, Amul and Pidilite who hold a commanding position in markets where foreign competition is limited. And then there are state-sanctioned monopolies in the provision of utilities such as electricity and water. These markets are largely the preserve of the public sector, and are not exactly contestable.
In the services sector, similar patterns of market concentration can be observed. There is also a division, though not exactly well ordered, in ownership patterns. Online markets tend to be dominated by foreign players or by firms heavily financed by foreign funds, while other service segments are more titled towards domestic players.
Take telecom. The sector is dominated by two large players (Jio and Airtel) and a weak third player (Vi) with an uncertain future. Together, Jio and Airtel account for more than two-thirds of the market. Both are controlled by Indian promoters, while the Indian government, a foreign and a domestic firm own significant stakes in Vi.
The airline industry (domestic travel) is also now dominated by two players — Indigo and Tata (Air India, Vistara, AirAsia India and Air India Express). Taken together, the two airline groups accounted for more than 80 per cent of the domestic market share in the year so far (Jan-Feb). In the private banking space, HDFC, ICICI and AXIS account for a significant share (though all of them have sizeable foreign ownership), while concentration is also evident in airports and ports.
Similar patterns can be observed in online markets as well. For instance, the retail market is dominated by Amazon and Flipkart; the payments market has been cornered by PhonePe and Google Pay; food delivery is split between Zomato and Swiggy; and transportation between Ola and Uber. Most of these companies are either foreign-owned or majorly backed by foreign players.
One could argue that these online markets by their very nature — the presence of network effects — are perhaps more inclined to move towards some sort of oligopolistic market structure. However, this extent of concentration of ownership is now not just limited to online market spaces.
Some firms may become large precisely because they are more efficient, and such dominance may not necessarily translate to market abuse. But, in other countries, though underlying economic structures do vary, the concentration of ownership in the hands of a few big firms has been linked to higher prices (or markups) for consumers, a declining share of labour income and rising wage inequality.
The negative effects of such market dominance don’t just end there. There is also the possibility of the more dominant firms being able to influence government policy in order to restrict competition by either erecting high entry barriers and/or distorting the playing field to the disadvantage of their competitors and thus consumers. This can be achieved by raising import duties, ushering in onerous regulations or licensing requirements, changing the rules of the game to restrict competitors or even making it difficult to sign beneficial free trade agreements.
Considering that across a range of goods and services, markets in India are now oligopolistic at best, duopolistic at worst, this growing concentration, national champions or not, warrants careful examination.
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