Indian Tea Industry Case Study

1.Concentration and Growth in Indian Tea Industry

Introduction and Research problem

The Indian tea industry forms one of the most important industries that shapes up the GDP and is a huge component when it comes to satisfy both the domestic and the foreign demand for tea. Growing demand should result in profitable outcomes for the industry in terms of lager supply and profits. However, the Indian tea industry fails to show this trend. As the tea industry is characterized by a number of competitive firms of different sizes, the responsiveness towards the rising demand and changing process may differ in magnitude. The main aim of the present study is to explain the role and extent of concentration in the tea industry which may be useful to trace

Moreover, market concentration in theoretically criticized on the grounds that it leads to unreasonably high prices and low output levels. Therefore it has been the central idea of many studies of concentration, mainly focusing on value for competition and anti monopoly policies. But not much of an effort has been put to correlate the market concentration effects of a specific industry to other aspects of market conduct and behaviors such as pricing behavior and various other dimensions of performances. It has chosen the Idian tyre industry as its study area because it is one such industry which was earlier dominated ny the MNCs, but now is dominated by Indian Business houses and the practice of horizontal and vertical concentration has given the concentration effect a new dimension, which demands further research. To do so, the following study aims to trace out the various phases of the way Indian automotive tyre industry, has evolved over time to study the various aspects of market concentration and finally giving some policy

The general factors that led to a full fleged establishment of tyre industry in India in 1930s are the availability nof a lot of raw materials (rubber) at cheap price as a result of International Rubber Regulation Agreement and the easy availability of cheap labour. Both the factors lead to low cost of production and paved the way for the growth of the industry. Other reasons include store purchase policies of the government which favoured the domestic industries which allowed the first rubber firm of India, the Dunlop Rubber Co. in Calcutta to gain a large share of production. This effect was further pushed by the heavy import tariffs and quotas that govt put on