One of the immediate actions by the Central government after the IndiGo fiasco in early December 2025 was to activate the competition button in civil aviation. The Ministry of Civil Aviation has reportedly given NOCs to two new airlines. Two airlines, which received NOCs last year, are about to commence operations. Reportedly, a few more are in the pipeline that may be approved in fast track mode.

The IndiGo crisis was not a case of corporate fraud. Still, it unleashed an unprecedented uproar, given the massive disruptions in travel and doubts of policy-regulatory bargaining, using passengers as hostages.

Two broad themes dominated the ensuing discussion; corporate governance and competition. Several experts have commented extensively on the corporate governance issues in many of its dimensions.

Competition conundrum

The issue of competition, however, has been only tangentially addressed, more as a conventional, text book solution to monopoly/duopoly/oligopoly (small group models) forms of market structures. However, is competition in this era of high-tech, high capital/finance, domination such a simple, linear solution? Can competition be ordered to be created in an industry/service that has reached high level of dominance of one/two players? Whether competition can be sustained in such industries even if they start with a multi-player structure?

This commentary explores these issues taking the examples of a few industries/services where the authorities in India have been trying to ‘create competition’ for some years.

Classical economics underlined competition as a basic feature of the market economy. However, Joan Robinson and Edward Chamberlin, through their research in the 1930s, brought out the dominance of imperfect/monopolistic competition.

Regulation has been the policy response for managing market failure emanating from such structures.

Civil Aviation

Civil aviation services in India moved from private monopoly (Tata Airlines, 1932) to State monopoly (nationalisation, 1953), to private-public co-existence since the early 1990s (Sahara Airlines, 1991; Jet Airways, 1993) till January 2022, when Air India was bought back by Tatas.

In 1995, six private airlines had a traffic share of about 10 per cent, and Air India 90 per cent; this got reversed by 2021. IndiGo had 54-55 per cent traffic share by then, despite many low cost carriers also entering the field since early 2000s.

Airlines is a small group model, with one or two large carriers dominating the market. High barriers to entry, massive capital costs and complex regulatory requirements, permits from various authorities, and intense competition on both price and non-price factors make it a winner-takes-it-all model.

Though airlines services provide dramatic visuals of failure, attempt to create competition through fresh licences has not been successful. Despite entry being always open, capable players seldom move into the field.

Telecom

Telecommunications, everywhere, are characterised by a few large firms: with high barriers to entry, massive infrastructure costs; interdependent decision-making, intense price and non-price competition, and quick market consolidation.

A State monopoly for long, after liberalisation, Indian telecom leap-frogged dramatically, providing multiple services to the masses. Private sector leaders first edged out the public sector giants; followed by the weaker private entities.

Airtel, and later, Jio consolidated very fast (with now about 34 per cent and 44 per cent subscriber share respectively) pushing Vodafone-Idea (Vi) to a distant third (17 per cent), and BSNL-MTNL to a fringe. A worried government keeps propping up the inefficient BSNL, and resorted to an unexpected step of having equity participation in Vi. It, like the proverbial Albatross, hangs around the neck of the government, seeking and getting more support; of frozen dues and deferred payments etc.

Stock Exchanges

Stock exchange is a special case of small group model. Though not capital-intensive like telecom and airlines, huge high-end technological infrastructure with real-time security, high liquidity and network effects, demanding regulatory framework etc. ensure that exchange business operates as a monopoly/duopoly in most countries.

In India, BSE and NSE, dominate the equity space, with NSE way ahead in F&O segments. MCX dominates the commodity space. Since dominance of NSE was evident by the early 2000s, government licensed three nation-wide commodity exchanges, when it was opened up.

Very soon MCX became dominant cornering almost 90 per cent of volume. The rise of NSE and MCX resulted in the closure of the small regional stock and commodity exchanges as well as the few others got approval in the interim as they could not attract enough participants and volumes.

Swimming against currents

Pure competition is a tale of the past; oligopolies led by big leader/s is the hard reality now. Not only hi-tech, capital-intensive sectors, but even service networks are oligopolies. Auditing, credit rating are concentrated services, operating globally, worrying many countries, including India. Even the approach to competition at times works against competition in an unequal-sized oligopoly environment.

The CCI approval for Air India-Vistara merger took several months, despite the merged entity having a market share of only about 25 per cent, when the leader, IndiGo, had about 65 per cent. Still, CCI neither exempted nor approved that merger in fast-track mode.

Effective regulation

While creating national champions have been successful in many countries, creating competition through affirmative industrial policies have rarely been so. Concentration has to be addressed through effective regulation and a fresh, realistic approach to competition policy.

CCI norms on mergers, thresholds, sizes, relevant markets and many other triggers need to be revisited in tune with the dynamics of a hi-tech, hi-finance, networked domestic and global players. And effective coordination between CCI and sectoral regulators needs substantial institutionalised, operational upgradation.

Modern market/industrial structures are the results of massive innovations and Schumpeterian-type creative destruction; not political-economy aspirations that worked in a different era. Then, Air India, MTNL/BSNL and many State monopolies were normal, that too without regulation. The new normal is concentrated, private business models. It is for the sectoral and competition regulators to regulate them effectively, and by taking national/security interests into account, to address the government’s concern.

Focussing on a comprehensive regulatory vision, coordination, capacity building in tune with the realities of the times and positioning them beyond rupture and capture are the available means.

The writer is former Director, National Institute of Securities Markets

Published on January 14, 2026