Learn how key players like Jio and Airtel dominate the market and their impact on Indian economy
More and more, monopolies and oligopolies from telecommunication to e-commerce are shaping the Indian business landscape. The massive power consolidation witnessed under the umbrella of large corporate houses thwarts healthy competition in the market. Smaller or medium enterprises are increasingly finding it hard to enter let alone survive in the country.
Let’s explore how monopolies are shaping India’s Business Landscape, their pros and cons for the country’s economy and their impact on competition.
Concentration of Power in Telcom Business
The Telecom sector is highly concentrated with leaders like Reliance Jio, Bharti Airtel, and Vodafone Idea, virtually owning the market. As of 2024, Reliance Jio boasted approximately an astonishing 44% of the total market share, with the balance owned by Bharti Airtel and Vodafone Idea. The fierce competition and high operation costs chafe small players and regional telecom providers away, leading to fewer options for consumers.
Jio’s initial aggressive price strategy was first associated with consumer cost savings. However, it led to a wave of consolidation, exit, or radical business model change for competitors in a bid to survive in the market. Thus, changing the very bedrock of India’s telecom landscape.
The dominance although initially beneficial for consumers, hasn’t come without pain. The telecom debt of India as of early 2024 exceeded ₹7 lakh crore. Firms like Vodafone Idea struggled to keep their heads above regulatory due and market pressures in the wake of this monopoly.
Reliance Jio currently enjoys a duopoly where prices are lower but innovations are less frequent as small players lack the resources to compete at this scale.
Retail Giants and E-Commerce Powerhouses
Similar is the case with retail and e-commerce in India. American e-commerce giant Amazon and Walmart-backed Flipkart combine to hold close to 62 per cent of the Indian online retail market.
Flipkart recently received an infusion from Walmart of US$3.6 billion, tightening its further grip. Consumers love fast delivery and good choices; local merchants and smaller retailers are finding it very challenging to compete with the might of e-commerce giants with much fewer resources and lack of scale.
Reliance Industries, which is Mukesh Ambani-controlled, has also expanded aggressively into retail. Reliance has acquired Hamleys, and Urban Ladder, and made a significant investment in digital commerce through JioMart. It has taken over a large chunk of India’s retail landscape, especially in tier-2 and tier-3 cities. This rapid growth creates something of a “retail oligopoly,” as some analysts put it.
India’s Digital Payments Industry
India’s digital payments industry, which has now grown to a turnover of ₹60 lakh crore by 2023, is also seeing consolidation. Google Pay, PhonePe (owned by Walmart), and Paytm command nearly 80% of the market share in digital payments.
As of 2023, for instance, PhonePe alone accounted for 47% of India’s UPI transactions, with Google Pay following closely behind. Although these companies have promoted financial inclusion and digital transformation, they have also limited competition. These monopolies are raising data privacy, and consumer-choice issues, resulting in intensified regulatory scrutiny.
The National Payments Corporation of India (NPCI) capped the market share for third-party UPI apps at 30% in 2021, aiming at a reduction of dependence on a few firms. However, this had little to no effect as the market continues to be dominated by such key players, influencing consumer behaviour and industrial standards.
Media and Entertainment Sector
The media and entertainment sector is not left behind in India in terms of the emergence of monopoly structures. In the television and digital media, the networks are dominated by Reliance through Viacom18.
In 2023, Reliance bought the rights to digital streaming of IPL at ₹23,758 crore. It was the highest payment made for digital streaming rights in India. Considering that the IPL is one of India’s premier sports events, this buy gave Reliance a real edge in command over advertising revenue and digital viewership.
Disney+ Hotstar secured a big slice of the Indian streaming market by using its acquired rights over popular sports and entertainment content. Now, Hotstar and Reliance dictate terms on the advertisers, the creators of content, and even consumers owing to their market dominance. This leaves little room for innovation and promotion of unique and true talent.
Effect on Innovation and Competition
The monopolistic trends within the Indian business landscape are bringing the domain into an arena where small and medium-sized enterprises (SMEs) find it difficult to enter or survive. SMEs face several other challenges like access to capital, resources, and customer reach. For example, the ₹13,000-crore acquisition spree Reliance went on recently, spreading the behemoth’s influence across retail, pharmaceuticals and elsewhere, shows how biggies may stifle opportunities for newer entrants. No newcomer can enter the market as these giants have set the standards for resources so high, almost becoming inaccessible for most others.
A report from the Reserve Bank of India in 2022 found more than 70% of Indian startups identified market dominance by large players as a significant barrier to growth. As these monopolies grow, the innovation will hurt in almost every sector. Smaller firms generally create inventive solutions to complex problems and advance technology that the monopolistic giants might ignore.
Consumers also face the negative consequences of unfair competition and trade practices in the market. By becoming dependent on a monopolist for the fulfilment of needs, an average consumer has no control over their fate. Their choices, behaviour and wants are easily ignored by the giants.
Oligopoly or monopoly give these already successful firms more power to dominate how the business and economy will function in a country. These firms have a grasp not only on the consumers but the logistics, employment, and finances of a large population of the country.
However, it is not all bad as every coin has two sides, and so do these monopolies. The giants certainly help the Indian economy thrive by providing stability and uniform business practices. The rate of growth is also accelerated under the leadership of a few just like in the case of the oligopoly of Suadi OPEC.
Future: The Way to Regulation
The Competition Commission of India (CCI) has taken various steps to suppress monopolistic practices. It is a fact that within 2024 alone, the CCI imposed penalties of over ₹2,500 crores on enterprises for market domination abuse to ensure fair competition. However, consumer rights protection and the promotion of fair trade practices should continue to be a focus for Indian regulatory authorities.
Monopolies and oligopolies would, of course, go on to yield efficiency and a lower price in the near term. However, such trends carry the risk of smothering innovation, curtailing choices for consumers, and an unnatural dependence on a small group of powerful corporations.
Thus, India’s business landscape must find a balance to get the most out of the advancement of corporate growth while promoting practices for healthy competition.
