India's Corporate Scaling Challenge: Need for Global Giants in High-Margin Sectors

Indian Express - Opinion · 26 Jun 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India's corporate sector shows progress with firms like Amul and RIL achieving significant revenue milestones, but lags in creating globally dominant, innovation-led companies, highlighting structural gaps in R&D, global market penetration, and sectoral profit concentration.

Key points

Amul became India's first FMCG firm to hit a turnover of Rs 1 trillion, while RIL became the first Indian company to cross $10 billion in profits, marking a watershed moment for the Indian corporate sector.

India has 35 companies with a turnover of over Rs 1 trillion in FY25, but only one has crossed $10 billion in profits, compared to dozens in the US, China, and Japan, indicating a gap in profitability and global competitiveness.

Large firms are crucial for productivity and innovation, as they spread fixed costs like R&D and compliance across vast output, driving down unit costs and raising efficiency, which is essential for global competitiveness.

India's corporate profit pool is concentrated in finance and commodities, with financials and commodity majors contributing 41% and 19% of aggregate profits respectively, reflecting a structural skew away from high-margin sectors like technology and advanced manufacturing.

Indian firms tend to scale domestically rather than globally, with limited global revenue exposure outside sectors like IT services, pharma, auto, and oil products, unlike global giants like Apple and Toyota that dominate international markets.

India's presence in high-margin, innovation-driven sectors like semiconductors and advanced industrials remains negligible, with few domestic equivalents of frontier firms like NVIDIA, limiting its share in global value chains.

R&D spending in India is sub-1% of GDP, lagging behind peers, and access to patient risk capital for deep-tech ventures is constrained, hindering innovation-led scaling.

[GS3-Economy] Regulatory uncertainty and fragmented factor markets raise the cost of scaling across states and sectors, creating barriers for firms to achieve global dominance.

Way Forward: India should increase R&D spending to at least 2% of GDP, incentivize deep-tech ventures through tax breaks and patient capital funds, and streamline regulatory frameworks to facilitate cross-sector scaling. Additionally, fostering global market penetration through trade agreements and intellectual property protection can help Indian firms compete internationally.

Key terms

Economic Populism

Economic populism refers to policies that prioritize short-term public approval over long-term economic stability, often by opposing big businesses or profits. For UPSC, this is relevant to GS2 (governance) and GS3 (economy) as it examines the balance between public sentiment and sustainable economic policies.

R&D Spending

Research and Development (R&D) spending refers to investments in innovation and technological advancement. For UPSC, it is critical as it directly impacts India's competitiveness in global markets, aligns with GS3's economic growth and development topics, and is a key indicator of a nation's innovation capacity.

Global Value Chains

Global Value Chains (GVCs) are international networks of production and trade where different stages of production are located across countries. For UPSC, understanding GVCs is essential for GS2 (international trade) and GS3 (economy), as India's integration into GVCs affects its economic growth, employment, and technological advancement.

Patient Capital

Patient capital refers to long-term investment funds that tolerate higher risks and longer gestation periods, often crucial for deep-tech and innovation-led ventures. For UPSC, this is relevant to GS3 (economy) as it highlights the need for financial instruments that support sustainable and scalable innovation in India.