Industrial Concentration in India: Unraveling the Perils and Crafting a Path to Inclusive

Industrial Concentration in India: Unraveling the Perils and Crafting a Path to Inclusive


Indian big business seems to be thriving, with prominent groups like Adani and Reliance Industries making significant strides. However, Small- and medium-scale firms, along with informal enterprises, are struggling to recover from the COVID-19 impact.


GS- 2 – (Government Policies and Intervention) (transparency and accountability)

GS-3- Industries


Crony Capitalism, Parliamentary Committee, Chief Justice of India (CJI), Gross Domestic Product (GDP)

Mains Questions:

Analyze the dangers associated with rapid industrial concentration and its implications for India’s economic landscape. (250 words)

Dimensions of the Article:

  • The Perils of Rapid Industrial Concentration
  • Challenges to Democracy and State Capture
  • Market Functioning and Concentration
  • The State’s Role in Promoting Big Business
  • State Support for Domestic Business and Global Expansion

The Perils of Rapid Industrial Concentration:

  • Market power stemming from industrial concentration poses serious threats to a country’s economic and social fabric. By suppressing competition, dominant businesses can artificially inflate profits and manipulate costs and prices.
  • As a consequence, income and asset inequality soar, leaving a significant portion of the population disadvantaged.
  • The resulting wealth disparity can hinder the growth and stability of the economy, leading to a less inclusive and equitable society.

Challenges to Democracy and State Capture:

  • The accumulation of excessive economic power can go beyond shaping market dynamics and extend to influencing political processes. When corporate interests overpower democratic institutions, a phenomenon known as state capture emerges.
  • This dilutes the role of civil society in countering such influence, limiting their ability to safeguard the interests of the public. State capture can lead to policies favoring the privileged few, perpetuating the concentration of wealth and entrenching socio-economic disparities.

Market Functioning and Concentration

  • The rapid growth of concentration is not solely a result of market competition but rather a consequence of market functioning. In economies with significant asset and income inequality, the functioning of markets favors those who are already wealthy. This inherently leads to the centralization of economic power in the hands of a select few.
  • Consequently, addressing the malicious outcomes of market functioning necessitates both market regulation and measures to curb the growth of dominant businesses and conglomerates.

The State’s Role in Promoting Big Business:

  • While civil society can advocate for action against growing concentration, the ultimate responsibility lies with the state to implement such policies. However, the state’s alignment with private capital, particularly big business, has intensified over time.
  • The rise of neoliberal ideologies has driven the belief that the state’s role is to facilitate unrestricted growth of private capital. Paradoxically, this has resulted in increased concentration rather than fostering healthy competition.

State Support for Domestic Business and Global Expansion:

  • State policy has been influenced by the notion that domestic big businesses must be supported to compete against global giants and expand internationally. This has led to protectionist measures and significant subsidies to favored business groups.
  • While liberalization opened Indian markets to global competition, state intervention has simultaneously protected certain business interests, leading to distorted outcomes and hampered competition.

Way Forward:

To steer India towards a more equitable and inclusive economic landscape, a multi-faceted approach is essential:

1. Strengthening Market Regulations: Robust regulatory mechanisms must be implemented to curb monopolistic practices and ensure a level playing field for businesses of all sizes.

2. Promoting Inclusive Growth: Nurturing an environment that supports small- and medium-scale enterprises and informal businesses can foster inclusive economic growth, bridging the gap between haves and have-nots.

3. Enhancing Civic Engagement: Encouraging active participation of civil society in policy formulation and public discourse will act as a bulwark against undue corporate influence on democratic institutions.

4. Transparency and Accountability: Enhancing transparency in political funding and accountability in policy-making will restore faith in democratic processes and diminish the influence of money in politics.

5. Diversifying Economic Opportunities: Exploring and supporting diverse sectors and industries will lead to a more resilient and balanced economy, mitigating the reliance on a few dominant players.


The path of unchecked industrial concentration and the resulting state capture present significant challenges for India’s economy and democracy. To safeguard the interests of the nation and ensure a more equitable future, proactive steps must be taken. Striking a balance between promoting big business and fostering a competitive landscape that empowers smaller players is the key to realizing the dream of a truly inclusive India. Only through prudent regulation, enhanced civic engagement, and diversification of economic opportunities can the nation chart a course towards sustainable and holistic growth.