New Delhi, July 27 -- A recent working paper from the Institute of Labor Economics (IZA) (shorturl.at/C8hdg) reaffirms the outsized role that family business groups play in shaping India Inc. It found that even as overall market concentration in India has declined, the top 25 family business groups still accounted for 11-15% of the country's GDP in 2020.

Regulatory measures like the Companies Act of 2013 and the Companies (Restriction on Number of Layers) Rules, 2017, were designed to curb excessive complexity. Yet, while these rules aim to check concentration, they overlook a more critical issue: governance.

As the paper notes, family business groups, regardless of size, often share a common design principle: intricate "interconnected ...