Several recent studies have come to the conclusion that economic reforms have not provided any clear evidence of increased competition or improved efficiency in Indian industry suggesting that concentration would have increased or remained the same. While all these studies have dealt with the static aspects of performance, the dynamic aspects of competitiveness such as growth and mobility of firms have not been looked into. This paper is an attempt to fill this gap. More specifically it analyses the growth and mobility of firms in the Food Products Industry in India, one in which there has been maximum entry of new firms in the 90s-the post-liberalization period.

The study shows that in the Food Products industry competition, measured in terms of average shifting, in general has declined over time implying that concentration has increased following economic reforms. But it is also seen that competition in terms of mobility not only exists but has also increased over time among the lower size classes of firms.

The analysis helps to establish that the Food Products industry in India is a typical case of dominant - firm-with-fringe competition. More importantly, the study identifies a market structure, which is consistent with a situation where overall concentration can increase, and yet not mean that there is no competition. The study also shows that in terms of methodology, it is only through a size-wise dynamic analysis that one can confirm if competition exists when there is overall concentration. This case study also provides a link between the size distribution of firms and market structure.

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