Market concentration risk: It has been over a month since the IndiGo scheduling crisis. The public outrage has faded. So has the regulatory urgency that briefly followed. The Directorate General of Civil Aviation’s interventions were announced loudly, then quietly absorbed into routine.
The immediate response looked firm. IndiGo was asked to cut capacity by 10 per cent. A temporary fare cap was imposed. On paper, this signalled consumer protection. In practice, it exposed a structural weakness: when the largest airline cuts flights, there is no competitive bench to step in. Capacity vanishes. Prices rise by stealth. Travellers bear the cost.
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Oligopoly in aviation industry
India’s aviation sector is no longer competitive in any meaningful sense. Two carriers dominate domestic skies. When one stumbles, the system wobbles. The market does not self-correct.
This is not the result of scale alone. It is the product of entry barriers, aggressive pricing by incumbents, and policy indifference to concentration. New entrants are either undercut into retreat or absorbed before they mature. The IndiGo episode merely made the fragility visible.
Market concentration across sectors
Aviation is not an outlier. Cement is controlled by a handful of firms with pricing discipline that leaves little room for smaller players. Telecom has collapsed from a crowded field to three private operators and a public-sector survivor. Consumers once enjoyed cheap tariffs during the consolidation phase. They now absorb steady price hikes with no alternatives.
Digital markets mirror the same pattern. E-commerce is a duopoly. Food delivery is split between two platforms. Cab aggregation has hardened into a closed club. When drivers strike or platforms glitch, users have nowhere to go. Banking, often assumed to be competitive, is also highly concentrated, with a few institutions accounting for a disproportionate share of deposits and credit.
The pattern is consistent. Scale is rewarded. Competition is tolerated only until it becomes inconvenient.
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Public-sector monopolies and institutionalised concentration
Concentration is even more explicit in public services. Train tickets are routed through a single portal with recurring failures. Coal, defence manufacturing, power transmission, and even digital commerce infrastructure operate through dominant state-backed entities.
Some monopolies are strategic by design. Many persist by inertia. The common outcome is predictable: weak service quality, slow innovation, and minimal accountability. Monopoly, public or private, rarely disciplines itself.
Competition Commission of India and enforcement gaps
This is where the Competition Commission of India should matter. It has wide statutory powers to examine market concentration, mergers, and abuse of dominance. Yet enforcement has been episodic and reactive.
The steady elimination of smaller firms, especially through acquisitions, has attracted limited scrutiny. Several high-profile cases have raised questions about whether scale is being examined as a risk rather than celebrated as success. By the time intervention arrives, markets are already closed.
The deeper problem lies upstream, in policy design itself. In sector after sector, government decisions have actively narrowed the field. High spectrum reserve prices and compliance costs accelerated exits in telecom. In aviation, slot allocation at congested airports, bilateral air service limits, and crisis-time relief tilted towards incumbents have raised entry barriers.
Banking consolidation was explicitly state-driven in the name of stability. These were not neutral outcomes. They were choices. When regulation privileges scale, competition policy is left to manage damage already done. No antitrust authority can restore rivalry once market structure has been politically engineered.
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Why governments tolerate business concentration
The government’s tolerance is not accidental. Large firms are easier to regulate, attract foreign capital, and deliver headline GDP numbers. Financial markets reward pricing power and entry barriers. Policymakers value stability over contestability.
The cost is deferred. Firms shielded from competition invest less in innovation and more in regulatory influence. Market power replaces productivity as the route to profits. Over time, the economy becomes less dynamic, not more efficient.
Lessons from global antitrust experience
Other economies have recognised this risk. The United States and the European Union have revived antitrust scrutiny. Japan and South Korea have constrained conglomerate power to protect competition. None of these countries punished firms for scale alone. They intervened when scale turned into exclusion.
India’s own experience offers warnings. Countries with entrenched business concentration often exhibit slower innovation, weaker institutions, and policy capture. Once firms become “too important,” accountability erodes. The IndiGo episode fits this pattern uncomfortably well.
India cannot afford to normalise this trajectory. Strategic sectors such as aviation, telecom, banking, and logistics are too important to be left with two or three dominant players. Firms that become “too big to fail” eventually become too big to regulate.
Restoring competition does not require hostility to large firms. It requires policy discipline. New entrants must be encouraged. Industry-level concentration data must be monitored early, not post-collapse. Merger scrutiny must focus on market structure, not just pricing effects. Competition is not a threat to growth. It is the condition that sustains it.
Shikha Bhakri is a Research Scholar at Indian Institute of Foreign Trade, New Delhi.