India’s quiet move towards duopoly: a risk investors can no longer ignore

Twenty years ago, Indian skies were filled with competition. Multiple airlines competed for every passenger, every route and every fare. Jet Airways, Indian Airlines, Kingfisher and Sahara all fought for survival on the basis of price, service and network strength.Today that sound has disappeared. IndiGo and Air India together control almost 90% of the domestic aviation market. Something fundamental has changed in Indian markets, and not for the better.

Let me be direct about what concerns me most. It’s not market volatility. They’re not even global headwinds. It’s the slow, quiet consolidation of India’s markets into what economists call duopolies: structures in which just two players control everything that matters.After going through multiple market cycles, I have learned one enduring truth: competition creates wealth; concentration destroys it. And today, sector after sector of the Indian economy is quietly settling into a duopoly in which two giants control a 70 to 90% market share. This is no longer a theoretical risk. It is now embedded in the fabric of modern Indian markets.

Think about your daily life. If you order food, it’s Zomato or Swiggy, which together handle almost 95% of deliveries. If you book a taxi, it is Ola or Uber. When you pay digitally, it is PhonePe or Google Pay with a share of more than 80%. Your mobile connection? Jio and Airtel have effectively erased meaningful competition.

Different sectors. Same pattern.

In theory, competition protects consumers. Prices drop. The quality improves. Innovation thrives. But when a market is limited to two dominant players, competition becomes performative. Prices may not increase overnight. The service should not deteriorate immediately. But the incentives are quietly shifting. When only two players remain in the game, they stop fighting for customers and start managing the market.

We’ve seen this movie before. In sectors such as telecom, cement, stock exchange. A brutal price war destroys weaker players. Capital burns. Balances burst. Follow exits. And suddenly the choice disappears.

What follows is not chaos.

What follows is control.

Source: DGCA report

Duopolies do not require explicit conspiracy. They don’t need backroom deals. They just observe each other. They calibrate the responses. They avoid aggression that disrupts profits. Economists call it tacit coordination. Consumers perceive it as higher rates, convenience rates, deterioration in quality and slower innovation – a tacit understanding that benefits incumbents at the expense of everyone else.

Aviation provides the clearest example. When one airline controls almost 65% of the market and the combined duopoly approaches 90%, it is no longer about efficiency, but about market power. Recent regulatory scrutiny of 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 is no longer a playing field. It will be a gated community. And regulators are starting to notice this. In a quiet but meaningful shift, the government recently approved new airlines Al Hind Air and FlyExpress, as Shankh Air prepares for takeoff, in an explicit bid to weaken the airline duopoly dominated by IndiGo and Air India. These approvals are not routine. They reflect a growing realization that when two players control almost 90% of a market, the risk is no longer competitive – it is structural.

Whether these new airlines will succeed is another question. Aviation is cutthroat, capital is scarce, margins are thin, but intention matters. It signals that policymakers understand a fundamental truth: markets don’t correct themselves once concentration hardens – they need intervention before dominance becomes fate.

Let me be clear: this is not an argument against big corporations. India needs champions. We need world leaders with scale and ambition. But leadership must go hand in hand with contestability – the constant threat that a smaller, sharper competitor can disrupt you.

Without that threat, markets stop serving consumers. They begin to serve themselves.

For investors – especially retail investors – this moment requires maturity. Duopolies can look attractive in the short term. Stabilize cash flows. Margins are expanding. Volatility decreases. But long-term value creation depends on healthy ecosystems, not fragile concentrations.

As shareholders we need to ask tougher questions.

As citizens, we must demand smarter regulation.

As markets, we need to consider why competition exists in the first place.

India’s growth story is strongest when opportunities are broad, not limited. When markets are deep, not shallow. When power circulates, rather than accumulates.

The slide towards a duopoly is not inevitable. But ignoring it makes it so. Markets have always rewarded those who see patterns before they become apparent. The duopoly pattern is now clearly visible.

The only question left is: what are we going to do about it?

(The author Jimeet Modi is founder and CEO of SAMCO Group. Opinions are his own)

(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of the Economic Times)