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The Finance Ministry, at a recent meeting earlier this month, raised concerns over the “oligopolistic nature” of India’s aviation sector. The reference to an oligopoly raises the question of which other Indian industries have markets dominated by a small number of large companies.
What is an oligopoly?
An oligopoly is a market structure in which a few firms hold significant market shares and their decisions can influence the market. Unlike a monopoly, there is more than one major player. Unlike a highly competitive market, individual firms cannot ignore the actions of their rivals.
A chapter by online academic journal ScienceDirect on non-competitive markets described an oligopoly as a market in which “several companies operate, but none of them has a negligible market share”. Firms in such markets can influence prices or quantities and have to take competitors’ decisions into account, it said.
How is an oligopoly identified?
Market concentration is one of the indicators to identify an oligopoly, and the Herfindahl-Hirschman Index (HHI) is commonly used to measure it. The index is calculated by squaring the market share of each firm and adding the resulting figures.
The HHI ranges from close to zero, where many firms have very small shares, to 10,000, where one company controls the entire market.
According to the US Department of Justice and Federal Trade Commission thresholds, an HHI of 1,800 or more indicates a highly concentrated market. A score between 1,000 and 1,800 indicates moderate concentration, while a score below 1,000 indicates a competitive market.
A high HHI, however, does not by itself establish that a market is an oligopoly. The relevant market, the number of firms, their individual shares and the interaction between them also matter.
Which Indian sectors have oligopolistic nature?
A series of recent analysis points towards aviation, telecom, paints and steel, where FY25 HHI data show highly concentrated markets. Two-wheelers also fall into the highly concentrated category under the HHI threshold, whereas cement, tyres and passenger vehicles are moderately concentrated.
Telecom, paints and steel also highly concentrated
An analysis of FY25 data, done by Business Standard in July 2025, found that market concentration was close to all-time highs in six of the eight sectors examined: aviation, cement, passenger vehicles, steel, telecom and tyres.
Paints and two-wheelers were the two sectors where concentration had moderated over the decade.
Five of the eight sectors—aviation, telecom, paints, steel and two-wheelers - had HHI scores of 1,800 or above and were therefore classified as highly concentrated under the US Department of Justice scale used in the analysis.
Cement, tyres and passenger vehicles were moderately concentrated, with scores above 1,000 but below 1,800.
The average HHI across the eight sectors rose to 2,532 in FY25, compared with 2,167 in FY20 and 1,980 in FY15.
An analysis of FY24 data, cited in the report, provided more sector-level evidence. It put the HHI at 3,607 for paints and 3,004 for telecom. Iron and steel had a score of 2,175, tyres 2,001 and cement 1,577.
The same analysis found that the combined revenue share of the two largest firms in telecom increased from 46.5 per cent in FY15 to 71.9 per cent in FY24. In steel, the corresponding share increased from 44.5 per cent to 57.6 per cent.
These figures show high market concentration, particularly in aviation, telecom, paints and steel.
What about FMCG?
The FMCG sector provides a different form of evidence.
A 2022 research paper by S Anupama, Dhanisha Dharmajan and Rajiv Nair examined the performance of the top 10 FMCG companies by market capitalisation listed in the NIFTY FMCG Firms section of the CMIE PROWESSIQ database. The study covered 2010-2020.
The researchers found that the sector appeared to be “overly dependent on the performance of a few firms”. Their analysis concluded that the sector’s dependence on a small number of companies could create risks in the event of an external shock.
In its conclusion, the study said its findings indicated a potential oligopoly in the FMCG sector.
Digital markets need more evidence
E-commerce, online travel aggregators and food-tech platforms have also been described as concentrated markets.
A CCI market study on the ecommerce industry, published in 2020, said that each of the three markets was “concentrated with a few large players”. However, the study did not calculate HHI or concentration ratios for these markets.
Carnegie’s analysis said market concentration should be based on the market shares of firms in the relevant market. It also cautions that HHI requires those market shares to be established first.
This means digital markets can be described as concentrated on the basis of the available evidence, but the material provided does not establish that all three have an oligopoly structure.
Aviation has the highest concentration
India’s aviation sector has some of the strongest indicators of an oligopolistic market structure.
An analysis based on FY23 revenue, cited in Business Standard report published Sunday, put the airline industry's HHI at 4,400, the highest among the other sectors so far. InterGlobe Aviation and the Air India-Vistara combination together accounted for 92.6 per cent of the combined net sales of airlines in FY23.
The concentration has since remained high. In July 2026, IndiGo and the Tata Group-owned Air India Group together accounted for about 91 per cent of domestic passenger traffic.
The airport side of aviation is also concentrated, as Adani Airport Holdings operates eight airports and accounts for about 24-25 per cent of passenger traffic, while GMR Airports has about 27.5 per cent. Together, the two private operators account for more than half of India's air passengers.
