India’s Dangerous Drift Toward Market Concentration and Corporate Power 07Dec025
(The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance. Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)
In the first week of Dec2025, IndiGo Airlines (InterGlobe Aviation) cancelled hundreds of flights across India — at one point over a thousand in a few days — after failing to staff enough pilots under stricter duty‑time rules, leaving thousands of passengers stranded. Because IndiGo controls roughly 60–65 per cent of domestic air traffic, the disruption effectively crippled much of India’s civil‑aviation network.
Under pressure, the government and the regulator DGCA granted IndiGo a temporary exemption from the tighter pilot rest and night‑duty norms — postponing enforcement till Feb2026.
That episode illustrates how a virtual duoopoly (or a near‑monopoly) in a critical sector can force regulatory roll‑backs, showing how concentrated market power undermines both reliability and regulatory discipline.
That disruption is not just an isolated operational hiccup; it is a vivid example of how India’s concentrated corporate landscape — dominated by a few giant players in critical sectors — shapes policy, limits competition and ultimately affects everyday consumers.
Corporate power
It has now become impossible to ignore: India’s economy is increasingly dominated by a handful of giant conglomerates and a small set of large digital platforms. Market after market inevitably ends up with a monopoly, a duopoly or at best a tight oligopoly. Sometimes this happens because of natural economics like high fixed costs or network effects.
But often it happens because of policy choices, regulatory capture or weak competition enforcement.
Economists like Viral Acharya saw this coming years ago. He warned that India’s “big five” business groups were gaining too much market power and that this concentration would ultimately suppress competition and hurt long-term growth.
His main point was simple: profits grow for the big firms, but overall private investment and innovation slow down. The economy becomes top-heavy, not broad-based.
The Big-5 conglomerates in India identified by Acharya are Reliance (Mukesh Ambani) Group, Tata Group, Aditya Birla Group, Adani Group and Bharti Airtel Group. The share of these "big five" conglomerates in India in total assets of non-financial sectors rose from 10 per cent in 1991 to nearly 18 per cent in 2021, wrote Acharya in his paper.
They "grew not just at the expense of the smallest firms, but also of the next largest firms", said Mr Acharya, because the share in total assets of the next five business groups halved from 18 per cent to 9 per cent during this period.
You don’t need an economics degree to see what he meant. Just look around at everyday sectors.
Due mainly to deleterious effects of Demonetisation, GST and COVID-19, informal sector has been shrinking in India; while the the formal corporate sector / India Inc has been growing. Pronab Sen, former chief statistician has been harping on this point for several years.
High Cost of Capital and Inflation
India’s cost of capital has remained high for years and cumulative inflation has been elevated. This combination quietly kills smaller firms. They either die out or get acquired, leaving only a few big players with the financial muscle to survive bad cycles.
India's low inflation prints in recent months and 125 basis point Repo rate cut by Reserve Bank of India (RBI) this year should have brought down India's cost of capital, but cost of capital is not coming down, especially for small- and medium-sized firms.
High interest rates and a risk-averse banking system make it almost impossible for new entrants to scale in capital-intensive sectors.
India's banking regulator RBI and Govt of India have aided oligopoly behaviour in the banking sector by not giving new banking licenses for a long period of time.
Regulatory Capture and Policy Tilt
The other part of the story is how government rules, spectrum licenses, auctions and approvals often tilt the playing field toward the largest conglomerates. Whether intentionally or accidentally, policies in key areas like telecom, airports, power distribution, mining and digital markets often end up favoring incumbents or politically close corporate houses. Over time, this reinforces dominance.
Crony capitalism: The doubling of quality control orders (QCOs) by Govt of India in the past three years also resulted in increasing market power of Reliance Industries in polyester fibre and dominance of Aditya Birla group (Grasim Industries) in viscose stable fibre. After the pressure from 50% US tariffs on Indian goods, the government is quietly rolling down many of these QCOs.
Sector by Sector: A Country of Duopolies and Monopolies
Telecom (mobile telephony) is now basically Airtel and Reliance Jio. Vodafone Idea is a shadow, surviving* but irrelevant. This didn’t happen naturally. Jio’s predatory pricing and the government’s tolerance of it during the first few years effectively wiped out a dozen competitors. Once the competition died, tariffs began rising again. This is a classic textbook case of how market power forms.
(* Airtel's Sunil Mittal derisively described Vodafone Idea as a half player saying Indian telecom market is a two and a half player market)
Power distribution is dominated by Tata Power and Adani Electricity wherever privatisation has happened. These are sectors where new entry is nearly impossible because of regulatory hurdles and capital intensity.
Online food delivery is an airtight duopoly: Zomato and Swiggy. A decade-long cash-burn war ensured that no one else could stand.
In India's civil aviation sector, IndiGo dominates domestic skies, with Air India the only meaningful alternative. SpiceJet is stuggling. Everyone else has died or merged.
Airports? After the last major privatisation round, most large airports are now run by either Adani group or GMR group. That’s it.
Cement and steel behave like old-fashioned cartels. Prices move in parallel. Capacity is coordinated. Consumers pay more — it’s that simple. In addition, the steel sector in India is protected by the government (trade protectionism), to an extent, by import tariffs and safeguard duties.
Cinemas have PVR Inox Ltd, basically one company after the merger. Soft drinks are Pepsi and Coca-Cola (Camap Cola with help from Reliance Industries is trying to make a comeback). Taxi rides are Ola and Uber. Digital ads are Google and Meta. E-commerce is Amazon and Flipkart.
Stock exchanges are NSE and BSE, with NSE being a near monopoly in volumes. DTH is effectively just Tata Play and Airtel Digital. Even in UPI payments, where India loves to claim “world-leading competition,” the reality is that PhonePe and Google Pay control the lion’s share.
And power trading? IEX or Indian Energy Exchange is practically a monopoly. PXIL and HPEX are mere footnotes. The IEX controls almost the entire short-term power market.
Quick Commerce: Blinkit, Instamart and Zepto
The newest addition to India’s oligopoly story is quick commerce. Blinkit (backed by Eternal Ltd, formerly Zomato Ltd) is the runaway leader. Instamart (Swiggy) is second. Zepto is a distant third. First mover Dunzo collapsed. As always, the sector started with a frenzy of new players, but within a couple of years became a three-player market already drifting toward a duopoly.
This is because quick commerce is insanely capital-intensive, heavily reliant on dense networks of dark stores, low margins and fast delivery fleets. Only companies with huge balance sheets can survive. Blinkit leverages Eternal Ltd’s cash and public markets. Instamart leans on Swiggy’s capital. Zepto burns venture capital funding. Everyone else disappeared.
Media Capture and Conglomerate Power
The media landscape mirrors the economy. The Times Group, Network18 (Reliance Industries), Zee (Subash Chandra's Essel group), India Today (Aditya Birla group), NDTV group (controlled by Adanis) and Hindustan Times are almost entirely owned by big business families and conglomerates. This reinforces the cycle of concentration: economic power feeds into media power, which feeds into political power, which feeds back into economic advantage.
The Curious Case of Public Sector Monopolies
But here’s a twist. Some of India’s remaining monopolies — Indian Railways, India Post, IRCTC, Coal India, Hindustan Aeronautics (HAL) — do not behave exploitatively. They have political and social mandates that force them to keep prices stable or even subsidised. Railways does not gouge passengers (but Tatkal and Premium Tatkal services are a scam). India Post does not overcharge.
These public monopolies show that monopolies per se are not always harmful. What matters is the incentive structure and public accountability. But some of these public sector monopolies are inefficient is a different matter.
In Nov2024, opposition leader Rahul Gandhi wrote an op‑ed in The Indian Express accusing a new breed of monopolists of using government influence to crush competition and enrich themselves, while clarifying he is “not anti‑business, but anti‑monopoly/oligopoly,” and advocating fair space for all businesses.
Oligopolies (a handful of dominant sellers)
An oligopoly is a market structure in which a small number of large firms have the majority of the market share. Firms are mutually interdependent and competition is often non-price based (for example, quality, advertising, services).
Automobiles: Maruti Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra are dominant. While many brands exist, these few players dominate sales volumes in the passenger vehicle segment.
Cement: UltraTech Cement, Ambuja Cements / ACC (Adani Cement) and Shree Cement rule the roost. The market is controlled by a few companies that collectively dictate output and pricing. Moreover, the sector is undergoing consolidation.
Media & Entertainment: Reliance Industries' JioHotstar is leading here. It wants to dominate the OTT (over the top) and VOD (video on demand) segments with its aggressive growth / acquisition strategy. Other rivals in this sector are Amazon Prime Video, Netflix and SonyLIV. This sector is fast turning into an oligopoly.
Even ports sector looks like an oligopoly. Several major ports in India are controlled by Govt of India. But in the private sector, Adani Ports & Special Economic Zone Ltd is trying to dominate with more than 25 per cent market share. Multi-national corporations, like, DP World, PSA International (Singapore) and APM Terminals (Maersk) have market concentration in Indian ports sector.
Why the Concentration Problem Matters
What Acharya argued — and what India is now experiencing — is that concentration undermines the competitive process. When five or six conglomerates dominate most important sectors, smaller firms can’t grow. Innovation slows down. The economy becomes dependent on a few giants.
India’s policymakers occasionally celebrate “national champions,” but the hidden cost is a weaker competitive ecosystem. True growth comes from broad participation, not from a few giants and their satellites.
The story of monopoly and duopoly capitalism in India isn’t a secret anymore. It’s visible in every bill you pay, every app you use, every product you buy, every service you depend on. And unless policy changes, the next decade will see this concentration deepen even further — until India’s economy resembles a set of private empires instead of an open, competitive marketplace.
Implications of Market Power for Indian Equity Investors
India’s market power concentration in monopolies, duopolies and oligopolies creates distinct risks and rewards for equity investors. The risks include concentration risk, as dominant firms like Tatas, Adanis and Reliance heavily influence equity indices, posing outsized risks if disrupted.
This entails regulatory risk also, since profitability often relies on favorable policies that can change suddenly; and systemic fragility, where shocks to key monopolies could lead to sector-wide cascading effects.
On the rewards side, dominant firms offer stable earnings with steady cash flow and predictable profits, though growth may be capped. Digital duopolies benefit from strong network effects that help maintain long-term dominance and returns. These firms also often receive higher valuations due to barriers to entry and sustained pricing power.
In summary, Indian stock investors benefit from the stability and growth potential of dominant firms but need to manage risks related to concentration, regulatory dependence and systemic vulnerabilities by maintaining portfolio diversification.
Concluding Remarks and Solutions
The IndiGo disruption and the broader pattern of monopolies, duopolies and oligopolies in India show how concentrated market power can affect everyday life, policy and the economy. While large firms offer stability and scale, their dominance often stifles competition, innovation and fair pricing. Equity investors benefit from predictable earnings but face hidden concentration and regulatory risks.
Indian mobile users today are paying three to four times more for their mobile plans than they did just five years ago.
To restore balance, the government must enforce stricter competition laws and reduce regulatory favoritism toward dominant players. Encouraging smaller firms through easier access to capital, fair licensing and infrastructure support can help diversify markets. Transparency in auctions, public procurement and sectoral policy is essential to prevent implicit “match-fixing” between regulators and conglomerates.
Consumers, too, must be aware of the limited choices and push for accountability through public discourse and advocacy. Ultimately, India’s long-term growth depends on creating an ecosystem where competition thrives alongside responsible corporate governance, not just where a few giants dictate terms.
If Viral Acharya was early to ring the alarm bell, today the bell is screaming corporate power.
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References:
Tweet 23Mar2025 High cost of capital, regulatory capture, monopolies and duopolies
Tweet 09Jul2024 Market power and market concentration; Herfindahl Hirschman Index
Rahul Gandhi on match-fixing monopoly and fairplay business
Viral Acharya Mar2023 paper on Big 5 Conglomerates with market power
Tweet 20Nov2025 doubling of QCOs or quality control orders helping Reliance Industries and Grasim Industries
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