In 1959, the government enacted the Monopolies and Restrictive Trade Practices Act to monitor and regulate the structure and investments of firms with assets exceeding Rs. 200 million. The legislation was introduced to fortify the licensing system.

The act had two primary objectives. The first was to reverse the economic concentration of wealth in a minority, and the second was to disperse the ownership and control of material resources more equitably among the broader population. It also aimed to impose restraints on business practices deemed contrary to the public interest.

However, the act helped entrench the License Raj. This complex web of licenses, permits, and quotas strangled economic activity and stifled free enterprise, significantly impeding economic growth and development.

The act inadvertently endowed the state, particularly the Monopolies and Restrictive Trade Practices Commission, with disproportionate power. This overreach sparked criticism, and the act came under fire for morphing into a sanctioning body for big businesses. It thus failed to achieve its well-intentioned objectives.

The act was amended in 1991, decreasing its rigidity by doing away with the need for pre-entry scrutiny of investment decisions by large companies. This amendment sought to spur economic growth by encouraging competition and reducing unnecessary regulatory burdens on businesses. The Competition Act eventually replaced the Monopolies and Restrictive Trade Practices Act in 2002.