Economic Reforms and Market Competition in India: An Assessment

Abstract

The announcement of New Industrial Policy in July 1991 marked a paradigm shift in the overall macroeconomic policies followed in India from greater control and regulations to the free rein of market forces. Subsequently, there has been a paradigm shift in the competition regulation in India, with the establishment of the Competition Commission of India. The underlying motive behind the regulatory changes has been to increase competition in all spheres of economic activities. Given this background, the present study intends to assess whether the changes in policy regimes could bring out the desired output in terms of heightened competition in various spheres of the manufacturing sector, specifically across various subsectors in the manufacturing sector. These are important not only from a consumer point of view but also to identify the areas of concern for vigilant policy implementation. Using multiple indicators of concentration, we find that despite the increase in competition across various subsectors, concentration levels remain high for many subsectors. We observed high levels of concentration in seven of the twenty-nine subsectors studied and in another three high-moderate concentration levels noticed.