‘Of 25 wealthiest family-run Indian businesses, top five held over 60% revenues in two decades ending 2020’

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The five wealthiest family business groups held over 60% of combined revenues of a cohort of the 25 wealthiest family-run busineeses in India for two decades ending 2020 , despite liberalisation making markets more competitive, according to a study that appeared in the World Bank Economic Review.

The study titled “Business Groups, Concentration and Market Power in India” published in the World Bank Economic Review authored by Simon Commander, visiting professor at IE Business School, Madrid, Spain among other researchers from different universities, found that Reliance, Adani, Birla, Om Prakash Jindal and Tata Groups put together controlled over 60% of the 25 wealthiest family-run firms’ business revenues between 2001 and 2020. Barring the Birla Group, whose share in the cohort reduced steadily during the study period, the shares of other family businesses increased. Reliance and Adani Groups have consistently constituted at least 20% share in the top 25 family-run businesses’ incomes. The shares of Om Prakash Jindal and Tata Groups increased steadily but stayed at less than 10% of revenue shares.

The study acknowledges that the concentration in the market has reduced and as a result competitiveness has increased after liberalisation. This however has not prevented the large family business groups from dominating the market. The top 25 family business groups constitute over 15% of the Gross Domestic Product–the value of goods and services sold–in 2020, the study observed.

“The paper finds that market concentration has indeed been declining during that period, mainly due to policy-induced shrinkage of the public sector. Concentration has also been falling for the private sector and for the FBGs. Thus, at the NIC-3 level, the proportion of industries with low concentration has risen considerably over the period,” the authors observed. The largest five firms within each NIC-3 industry, controlled more than half of the revenues in around 74% of NIC-3 industries, the study found.