Billionaire Raj: The rise of India’s multi-business conglomerates

Source– The post is based on the article “Billionaire Raj: The rise of India’s multi-business conglomerates” published in the Business Standard on 18th February 2023.

Syllabus: GS3- Indian economy

Relevance: Wealth concentration

News- Recently, two announcements of the past few days grabbed attention. One was Tata-owned Air India’s eye-popping order for 470 passenger planes. The second announcement was an investment commitment of about Rs 3.5 trillion by various business houses

How is the business being dominated by a few large firms in India?

Gautam Adani’s companies run some of India’s biggest ports, operate a fifth of its power transmission lines, and accommodate a quarter of its commercial air traffic.

Tata group’s chairman recently mentioned investment plans totalling $90 billion for the next five years.

Mukesh Ambani has made various pronouncements for investments of about Rs 10 trillion. His ambitions include producing a fifth of the country’s renewable energy.

The Rs 30-trillion investment mentioned by just the Big Three equals a tenth of India’s GDP. They account for 20% of the net profits of 3,250 out of India’s listed, non-financial companies.

What can be concluded by increasing wealth concentrations in the hands of a few conglomerates?

The increasing concentration of mega investments is because of their capital-intensive nature and the scale of the country’s ambitions.

The rise of multi-business conglomerates stands in contrast to the earlier rise of focused, single-business enterprises in telecom, IT services, pharmaceuticals, and automobiles.

The experience of South Korea, Japan, and Russia has shown, the conglomerate model often comes with political connections. But such comparisons can be overblown.

The six big groups have revenue equal to about 11% of India’s GDP. Samsung alone accounts for more than that in South Korea.