India’s quiet drift toward duopoly: A risk investors can no longer ignore

Twenty years ago, India’s skies were crowded with competition. Multiple airlines battled for every passenger, every route and every fare. Jet Airways, Indian Airlines, Kingfisher, Sahara—each fought to survive on price, service, and network strength.Today, that noise has faded. IndiGo and Air India together control nearly 90% of the domestic aviation market. Something fundamental has changed in India’s markets and not for the better.Let me be direct about what concerns me most. It’s not market volatility. It’s not even global headwinds. It’s the slow, silent consolidation of Indian markets into what economists call duopolies—structures where just two players control everything that matters.After navigating multiple market cycles, I’ve learned one enduring truth: competition builds wealth; concentration destroys it. And today, sector after sector in India’s economy is quietly settling into duopolies where two giants command 70–90% market share. This is no longer a theoretical risk. It is now embedded in the structure of modern Indian markets.126199651Think about your daily life. When you order food, it’s Zomato or Swiggy—together controlling nearly 95% of deliveries. When you book a cab, it’s Ola or Uber. When you pay digitally, it’s PhonePe or Google Pay with over 80% share. Your mobile connection? Jio and Airtel have effectively erased meaningful competition.Different sectors. Same pattern.In theory, competition protects consumers. Prices fall. Quality improves. Innovation thrives. But when a market narrows to two dominant players, competition becomes performative. Prices may not spike overnight. Service may not deteriorate immediately. But incentives quietly shift.When only two players remain in the game, they stop fighting for customers—and start managing the market.We have seen this movie before. In sectors like telecom, Cement, Stock Exchange. A brutal price war wipes out weaker players. Capital burns. Balance sheets crack. Exits follow. And suddenly, choice disappears.What follows is not chaos.What follows is control.Source: DGCA ReportDuopolies don’t need explicit collusion. They don’t need backroom agreements. They simply observe each other. They calibrate responses. They avoid aggression that disrupts profits. Economists call it tacit coordination. Consumers experience it as higher fares, convenience fees, deterioration in quality and slower innovation—a silent understanding that benefits incumbents at everyone else’s expense.126199643Aviation offers the clearest illustration. When one airline controls close to 65% of the market and the combined duopoly approaches 90%, the question is no longer about efficiency—it’s about market power. Recent regulatory scrutiny around IndiGo is not incidental. It reflects a deeper discomfort with how concentrated this industry has become.And this is where the real danger lies.When market power concentrates, the market stops being a playing field. It becomes a gated community. And regulators are beginning to take notice. In a quiet but meaningful shift, the government has recently cleared new airline entrants Al Hind Air and FlyExpress while Shankh Air prepares for take-off, in an explicit attempt to dilute the aviation duopoly dominated by IndiGo and Air India. These approvals are not routine. They reflect a growing recognition that when two players control nearly 90% of a market, the risk is no longer competitive — it is structural.Whether these new airlines will succeed is a different question. Aviation is unforgiving, Capital is scarce, Margins are thin but the intent matters. It signals that policymakers understand a basic truth: markets do not self-correct once concentration hardens — they need intervention before dominance becomes destiny.Let me be clear: this is not an argument against large companies. India needs champions. It needs global leaders with scale and ambition. But leadership must coexist with contestability—the constant threat that a smaller, sharper competitor can disrupt you.Without that threat, markets stop serving consumers. They start serving themselves.For investors—especially retail investors—this moment demands maturity. Duopolies can look attractive in the short run. Cash flows stabilise. Margins expand. Volatility reduces. But long-term value creation depends on healthy ecosystems, not fragile concentrations.As shareholders, we must ask harder questions.As citizens, we must demand smarter regulations.As markets, we must remember why competition exists in the first place.India’s growth story is strongest when opportunity is broad, not narrow. When markets are deep, not shallow. When power circulates—rather than accumulates.The drift toward duopoly is not inevitable. But ignoring it makes it so. Markets have always rewarded those who see patterns before they become obvious. The duopoly pattern is now clearly visible.The only question left is: what will we do about it?(The author Jimeet Modi is founder and CEO, SAMCO Group. Views are own)(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)