The Hindu Business Line : After 15 years of reforms, <I>desi </I>firms hold their own against MNCs

HOMEGROWN companies have managed to hold their own against competition from multinationals across most sectors, nearly a decade and a half after the economy opened up to foreign competition.

Although the doomsayers had predicted the curtains for Indian businesses when the MNCs entered the country, a comparison of the 1992 and 2004 market shares of Indian companies and MNCs across seven major consumer categories shows that desi firms have managed to hold on to a dominant 85 per cent market share in the pharmaceuticals sector and have maintained around 50 per cent market share in segments such as consumer electronics and durables and categories such as breakfast cereals.

Sectors where MNCs have made significant inroads over the last 14 years include products such as beverages, wafers and potato chips and the passenger car segment.

According to a recent McKinsey study, Indian pharmaceutical companies have retained a dominant 85 per cent market share in 2004.

The market share of Indian companies registered just a minor blip from their 1992 share of 90 per cent.

Multinational firms such as GSK, Pfizer and Novartis have not quite managed to wrench control from homegrown drug majors such as Ranbaxy, Wockhardt, Cipla and Dr Reddy's.

In the consumer durables sector, the MNCs made their mark only after 1995-96 after the Korean chaebols, mainly LG and Samsung, entered the Indian market with aggressive pricing and marketing strategies.

The 2004 market share in consumer electronic segments such as washing machines and televisions is split evenly between Indian and multinational brands.

The impact of foreign competition has, however, been much more pronounced in the passenger cars segment.

According to the study, multinational carmakers led by Suzuki Motors and Hyundai have cornered a 77-per cent market share.

In categories such as aerated drinks, wafers and potato chips, the MNCs have been able to boost their market share through the inorganic route, with major Indian brands such as Uncle Chips, Thums Up and Limca being taken over by US based Pepsico and Coca Cola.

In the potato chips/wafers category, the MNCs have a market share of 63 per cent in 2004, while in beverages they nearly dominatethe market.

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