India’s Push for a Fairer, Consumer-First Economy

This editorial is based on “IndiGo meltdown has exposed a harsh truth: Passengers absorb damage while companies walk away” which was published in The Indian Express on 09/12/2025. The article brings into picture how IndiGo’s meltdown over new fatigue norms exposes corporate negligence and the dangers of a near-monopoly in aviation. It also highlights how shrinking competition—echoing the telecom duopoly—forces passengers to suffer, testing the state’s regulatory resolve.

For Prelims: Competition Act, 2002, Competition Commission of India, Directorate General of Civil Aviation,Airports Economic Regulatory Authority of India, UPI ecosystem, Common Equity Tier 1, India's e-commerce market.  

For Mains: India’s Existing Regulatory Framework for Monitoring and Controlling Market Power, Rising Market Consolidation Across India’s Key Sectors Creating a Systemic “Too Big to Fail” Risk

The recent operational meltdown of IndiGo, triggered by the enforcement of new pilot fatigue norms, has left thousands stranded, exposing severe corporate negligence despite ample regulatory lead time. This crisis, however, is merely a symptom of a deeper malaise: the crystallization of a "Too Big to Fail" monopoly in Indian aviation. It mirrors alarming trends in sectors like telecom, where the rise of duopolies and the erosion of consumer choice signal a shift from a competitive market to one defined by structural dominance. As passengers pay the price for this lack of alternatives, the state's role as a regulator faces its ultimate test.

What is India’s Existing Regulatory Framework for Monitoring and Controlling Market Power? 

India's current framework acts primarily as a "referee" rather than a "gatekeeper." It is designed to punish foul play after it happens (Ex-Post) rather than preventing a player from becoming too strong in the first place (Ex-Ante).  

• The Core Legislation: The Competition Act, 2002- This is the primary legal weapon against market dominance. It replaced the older MRTP Act (which frowned upon monopolies per se). 
  • Section 4 of the Competition Act, 2002, bans companies from abusing their dominant power, through unfair pricing, limiting supply, blocking market access, or imposing unfair terms.  
  • It regulates misuse of dominance, not dominance itself, ensuring fair competition for consumers and other businesses. It prevents:  
    • Predatory Pricing: Selling below cost to kill competition (often cited in Telecom). 
    • Limiting Production/Supply: Intentionally reducing flights or services to manipulate prices. 
    • Denial of Market Access: Preventing new players from entering (e.g., hoarding airport slots). 
  • Section 5 & 6 (Regulation of Combinations): 
    • Merger Control: Any merger (like Air India + Vistara or PVR + Inox) must be approved by the CCI. 
    • The AAEC Test: The CCI evaluates if the merger will cause an "Appreciable Adverse Effect on Competition" (AAEC) in India.  
      • If yes, it can block the deal or demand "remedies" (e.g., forcing them to give up some airport slots). 
• The Enforcer: Competition Commission of India (CCI):  
  • Powers: It can impose massive penalties (up to 10% of the average global turnover of the last three years) and order companies to "Cease and Desist." 
  • The "Ex-Post" Limitation: The CCI acts after the damage is done. For example, it fined Google ₹1,337 crore after it had already monopolized the Android market. 
• Sectoral Regulators (The Conflict of Jurisdiction) 
  • Telecom (TRAI): The Telecom Regulatory Authority of India regulates tariffs and quality. 
  • Conflict: In the CCI vs. Bharti Airtel (2018) case, the Supreme Court ruled that the CCI must wait for the sectoral regulator (TRAI) to finish its technical findings before it can investigate predatory pricing. This delays action against cartels. 
  • Aviation (DGCA & AERA): 
    • Directorate General of Civil Aviation: Focuses on safety and licensing (e.g., pilot fatigue norms). It has little power to check economic monopolies. 
    • Airports Economic Regulatory Authority of India: Sets airport tariffs but does not control airline market share. 
    • Gap: There is no specific regulator mandated to ensure that airline routes remain competitive. 
• Recent Evolutions (Trying to Fix the Gaps) 
  • Recognizing that the 2002 Act is too slow for the digital age, the government has introduced two major shifts: 
  • Competition (Amendment) Act, 2023: 
    • Deal Value Thresholds: Introduced to catch "Killer Acquisitions" (where big tech buys small startups just to kill them) even if they don't meet asset/turnover targets. 
    • Settlements & Commitments: Allows companies to close cases faster by agreeing to fix the problem without a long legal battle. 
  • Draft Digital Competition Bill (The "Ex-Ante" Shift): 
    • Proposed to regulate Systemically Significant Digital Enterprises (SSDEs) (like Google, Amazon). 
    • Ex-Ante Approach: Unlike the current law, this would impose rules beforehand (e.g., "You cannot favor your own products") rather than waiting for a complaint. This is currently stalling in discussions. 

How is Rising Market Consolidation Across India’s Key Sectors Creating a Systemic “Too Big to Fail” Risk? 

• Operational Fragility & Moral Hazard (Aviation): Hyper-concentration in aviation creates a "Single Point of Failure," where corporate mismanagement instantly escalates into a national mobility crisis.  
  • This dominance fosters Moral Hazard, as the market leader knows the state cannot allow it to fail without collapsing the country's transport network, leading to riskier operational bets like under-staffing.  
  • For instance, according to the DGCA, IndiGo carried 83.14 lakh passengers in August 2025, accounting for a 64.2% market share, its recent pilot roster failure disrupted thousands of flights, leaving passengers with no alternatives and causing spot fares on other airlines to spike by 300-400%. 
• Tacit Collusion in a Non-Contestable Market (Telecom): The telecom sector has shifted from hyper-competition to a stable Oligopoly, characterized by Tacit Collusion where dominant players synchronize tariff hikes rather than competing on price.  
  • High entry barriers (spectrum costs, infrastructure) render the market non-contestable, stripping consumers of bargaining power and choice. 
  • For instance, In 2024, Airtel's share rose to 38.6%, while Jio's increased to 41.6%,, both hiked tariffs by 10-25% almost simultaneously, effectively ending the era of low-cost data for Indian consumers. 
• Systemic Risk in Digital Payments (Fintech): A dangerous Duopoly in the UPI ecosystem creates a systemic risk where a technical glitch at one provider paralyzes nearly half of the nation's digital transactions. 
  • This "Winner-Takes-Most" dynamic creates a "Kill Zone" for innovation, as new entrants cannot burn cash to compete with the incumbents' network effects. 
  • PhonePe and Google Pay process over 80% of all UPI volumes, the NPCI was forced to defer its 30% market cap volume cap implementation again, admitting that no viable alternative exists to de-risk the ecosystem. 
• Supply Chain Sovereignty & Infrastructure Monopolies (Logistics): The consolidation of critical gateways (Ports & Airports) under single conglomerates creates Vertical Integration risks, where private monopolies can dictate trade costs and logistics efficiency. 
  • This unchecked Pricing Power over public infrastructure allows dominant players to cross-subsidize and squeeze out smaller logistics competitors.  
  • For instance, In India, the consolidation of container terminal operations at some major ports has led to scenarios where a few private terminal operators set stevedoring charges and storage fees.  
    • Smaller logistics companies struggle to compete, while large exporters and importers often negotiate preferential rates, highlighting the risks of concentrated control without government regulation. 
• The "Too Big to Save" Dilemma (Banking/D-SIBs): Mergers creating mega-banks increase Systemic Contagion Risk, where the failure of one institution could destabilize the entire economy, forcing taxpayer-funded bailouts.  
  • This consolidation creates Domestic Systemically Important Banks (D-SIBs) that may encourage risky lending behavior under the implicit assumption of a sovereign safety net.  
  • For instance, Post-merger, HDFC Bank's weightage in the Nifty 50 spiked to ~14%, the RBI continues to classify SBI, HDFC, and ICICI as D-SIBs, requiring them to maintain higher Common Equity Tier 1 (CET1) capital buffers to mitigate risk. 
• Homogenization of Information (Media & Entertainment): Horizontal consolidation in the media sector threatens media plurality, creating a Content Giant capable of dictating advertising rates and controlling the narrative.  
  • This reduces the "Marketplace of Ideas" to a corporate monologue, where a single entity controls both the content creation (studios) and distribution (streaming/TV) pipelines.  
  • For instance, The Reliance-Disney merger created an entity controlling ~40% of the TV/Streaming viewership and key cricket broadcasting rights, raising concerns about ad-rate monopolization and content diversity. 
• Regulatory Lag vs. Ex-Ante Necessity (Policy): The speed of market consolidation outpaces Ex-Post enforcement (fines after the crime), rendering penalties merely a "cost of doing business" for giants.  
  • Without Ex-Ante Regulations (preventative rules like the Digital Competition Bill), regulators are left fighting a losing battle against Gatekeeper Platforms that have already permanently distorted the market.  
  • For instance, despite lengthy CCI investigations, Walmart-owned Flipkart continues to hold the top position in India's e-commerce market, boasting a 48% market share and outpacing industry growth 
  • The proposed Digital Competition Bill remains stalled, leaving smaller sellers vulnerable to algorithmic bias and deep discounting. 

"Too Big to Fail" Dynamics

Dynamic / Mechanism	How It Works	Why It Is Dangerous (The Fallout)	Sectoral Manifestation (India)
The Moral Hazard Paradox	When a company becomes so critical that its collapse would cripple the nation, it assumes the government must save it. Consequently, it takes reckless operational risks (e.g., under-staffing, aggressive expansion) knowing it has an implicit sovereign safety net.	Privatized Profits, Socialized Losses. The entity keeps the profits from risky behavior, but the taxpayer pays the price (via bailouts or chaos) when things go wrong.	Aviation: IndiGo running lean on pilot reserves, assuming its network is too vital to be grounded, leading to mass cancellations.
High Barriers to Entry (The Moat)	Incumbents hoard critical finite resources—Airport Slots, Spectrum, or Data—creating an "Economic Moat" that makes it impossible for new, smaller players to enter the market.	Innovation Stagnation. The market becomes "Non-Contestable." Without the threat of new rivals, incumbents have zero incentive to improve service quality or innovate.	Infrastructure: Control over prime morning slots at Mumbai/Delhi airports by legacy carriers prevents new airlines (like Akasa) from competing for business travelers.
Regulatory Capture & Lag	The regulated entity becomes larger and more powerful than the regulator. The cost of enforcement (legal battles) becomes trivial for the giant, or the regulator fears that strict action might disrupt essential services.	The "Toothless Watchdog" Syndrome. Regulations become "Ex-Post" (fines after the damage) rather than "Ex-Ante" (preventing the damage), turning penalties into a mere "cost of doing business."	E-Commerce: Platforms paying fines for anti-competitive practices while continuing the same deep-discounting models that wipe out small retailers.
Supply Chain Squeeze (Monopsony)	The giant isn't just a monopoly seller, but a monopoly buyer (Monopsony). It dictates terms to suppliers, airports, or logistics partners, squeezing their margins to fund its own dominance.	Ecosystem Erosion. Small vendors and ancillary industries (e.g., ground handling, tower companies) are starved of profits, leading to a hollowed-out supply chain that relies solely on one client.	Retail/FMCG: Large quick-commerce or retail giants dictating razor-thin margins to FMCG distributors, forcing smaller distributors out of business.

What Measures can Help Prevent Market Concentration and Ensure Greater Consumer Safety and Choice? 

• Institutionalize "Asymmetric Ex-Ante" Regulation: Instead of the current "one-size-fits-all" approach, regulators must adopt an Asymmetric Regulatory Framework that places stricter compliance burdens solely on "Systemically Significant Enterprises" (SSEs).  
  • By proactively prohibiting Self-Preferencing and Bundling for dominant players while leaving smaller challengers unregulated, the state can artificially lower entry barriers.  
  • This shifts the paradigm from "punishing abuse" to "structuring fair play," ensuring that market leaders cannot leverage their size to crush nascent competition before it creates a Contestable Market. 
• Enforce the "Essential Facilities Doctrine" in Infrastructure: To prevent vertical monopolies, critical infrastructure, such as airport slots, telecom towers, and payment gateways, must be legally classified as "Common Carrier" Utilities.  
  • This mandates that dominant owners provide open, non-discriminatory access to competitors at regulated rates, preventing Gatekeeper Bottlenecks.  
  • By unbundling the ownership of infrastructure from the delivery of service, the state ensures that a private monopoly cannot weaponize its control over physical assets to exclude rivals from the digital or service economy. 
• Operationalize "Dynamic Price Collars" & Algorithmic Audits: To curb the exploitation of consumer helplessness during supply shocks, regulators should implement Dynamic Price Collars that cap "surge pricing" multiples based on historical averages, preventing Predatory Volatility.  
  • Furthermore, mandatory Algorithmic Audits for airline and telecom pricing engines are essential to detect and dismantle Tacit Collusion mechanisms.  
  • This ensures that AI-driven pricing models serve to optimize efficiency rather than extract rent through synchronized price hikes that mimic cartel behavior. 
• Sunset "Grandfather Rights" for Dynamic Asset Reallocation: The perpetual retention of prime assets, such as peak-hour airport slots, under "Grandfather Rights" must be replaced with a Performance-Linked Reallocation Regime.  
  • Regulators should introduce "Use-It-or-Share-It" clauses where a percentage of prime slots are periodically clawed back and auctioned exclusively to new entrants or smaller players.  
  • This prevents the fossilization of market share and ensures that public resources are continuously churned to favor Competitive Efficiency rather than historical dominance. 
• Mandate "Frictionless Interoperability" & Data Portability: To destroy the "Lock-in Effect" that sustains duopolies in telecom and fintech, the state must mandate Frictionless Interoperability and real-time Data Portability.  
  • If a consumer can switch service providers instantly without losing their transaction history, number, or loyalty benefits, the Switching Cost drops to near zero.  
  • This forces incumbents to compete on service quality rather than relying on the captivity of their user base, effectively commoditizing the platform and empowering the user. 
• Deploy the State as a "Strategic Market Balancer": Rather than purely retreating from business, the state should strategically deploy public utilities, like Vande Bharat trains or BSNL, as "Price Anchors" in sectors prone to cartelization.  
  • By maintaining a high-quality, subsidized public alternative on high-density routes, the government creates a "Ceiling on Rational Pricing" that private monopolies cannot breach without losing market share.  
  • This ensures that the public sector acts not as a monopoly itself, but as a permanent check against private profiteering. 
• Fiscal Rationalization via "Input Tax Neutrality": The government must eliminate inverted duty structures by bringing critical inputs, such as Aviation Turbine Fuel (ATF) and Natural Gas, under the GST Regime.  
  • Currently, high state-level taxes disproportionately cripple smaller players with thinner capital buffers, while deep-pocketed giants absorb the cost.  
  • A uniform, input-tax-credit-enabled regime creates a Level Playing Field, ensuring that survival in the market is determined by operational efficiency rather than the ability to sustain regulatory arbitrage and tax burdens.

Conclusion:

India’s unfolding duopolies signal not just market failure but regulatory complacency that society can no longer afford. Preventing a “Too Big to Fail” future requires shifting from reactive penalties to proactive structural safeguards. A fair marketplace must be designed, not discovered. As the saying goes, “When power concentrates, freedom evaporates — unless regulation steps in to restore the balance.” 

Drishti Mains Question:

“Rising consolidation across key sectors is creating a systemic ‘Too Big to Fail’ challenge in India.” Critically examine with suitable examples.

FAQs:

Q. Why is IndiGo’s meltdown seen as a symptom of deeper market failure?
Because it exposes how a near-monopoly in aviation can turn operational negligence into a nationwide crisis, with passengers having no viable alternatives. 

Q. What is the main limitation of India’s current competition regulation?
India follows an ex-post model—acting after abuse occurs—rather than preventing dominance through proactive ex-ante rules. 

Q. How are duopolies in sectors like telecom and fintech harming consumers?
They reduce competition, enable coordinated price hikes, create system-wide risks, and limit consumer choice by locking users into dominant platforms. 

Q. Why do experts call for ex-ante regulation now?
Because market giants grow faster than regulators can respond, making penalties ineffective; proactive rules are required to prevent abuse before it happens. 

Q. What reforms can help curb market concentration in India?
Key steps include asymmetric regulation for dominant firms, opening essential facilities to rivals, slot reallocation, dynamic price caps, interoperability mandates, and strategic public-sector competition.

 

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims:

Q. With reference to ‘consumers’ rights/privileges under the provisions of law in India, which of the following statements is/are correct? (2012)

1. Consumers are empowered to take samples for food testing. 
2. When a consumer files a complaint in any consumer forum, no fee is required to be paid. 
3. In case of the death of a consumer, his/her legal heir can file a complaint in the consumer forum on his/her behalf. 

Select the correct answer using the codes given below: 

(a) 1 only 

(b) 2 and 3 only 

(c) 1 and 3 only 

(d) 1, 2 and 3 

Ans: (c) 

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Mains:

Q. Has the Indian governmental system responded adequately to the demands of Liberalization, Privatization and Globalization started in 1991? What can the government do to be responsive to this important change? (2016)