Market Concentration Risks Prompt Call for Share Caps Across Indian Sectors

India's aviation sector faced a major disruption in early December 2025 when IndiGo, controlling over 65% of the domestic market, cancelled thousands of flights nationwide. The Directorate General of Civil Aviation intervened to force schedule cuts, while the Competition Commission of India began examining potential violations of the Competition Act regarding abuse of dominant position.

Aviation Sector Exposes Concentration Risks

The IndiGo episode demonstrated the consequences of excessive market concentration. With no meaningful alternatives to absorb the disruption, an operational lapse at the dominant carrier cascaded into a systemic crisis affecting the entire sector.

Power Transmission Faces Similar Concentration

Power Grid Corporation of India Ltd. now presents comparable concentration risks in the transmission sector. The company controls more than half of all inter-state transmission projects awarded under competitive bidding, raising concerns about execution bottlenecks in India's clean energy transition.

PGCIL currently handles 46 of the 91 ISTS projects under construction, representing a cumulative value exceeding ₹1.27 lakh crore. This concentration has resulted in significant delays across crucial projects:

One transmission scheme designed to evacuate 8.1 GW of solar energy from Rajasthan, expected operational by 2022, remains incomplete. Rajasthan experienced nearly 4 GW of clean power curtailment between March and August 2025, with curtailment levels rising from 8.5% to over 50%.

Telecommunications Sector Precedent

India's telecommunications sector provides a cautionary example of concentration effects. As of September 2025, according to TRAI data, the market has consolidated into a dominant duopoly structure. The consequences became evident in August 2025 when affordable entry-level plans were discontinued sector-wide, forcing consumers to higher-priced alternatives.

Union Telecom Minister Jyotiraditya Scindia publicly acknowledged that excessive concentration among limited carriers creates unhealthy market conditions. The Telecom Regulatory Authority of India implemented spectrum caps limiting operators to 50% of spectrum in any single band and 25% across all bands.

Airport Sector Concentration Concerns

Significant consolidation has occurred in India's airport industry, with concentration of airport assets among limited operators. The Finance Ministry and NITI Aayog raised concerns about this concentration, though no regulatory caps were imposed. This contrasts with the United Kingdom, where the Competition Commission in 2009 forced BAA to divest three airports after finding its 81% control of London's runway capacity harmed competition.

Proposed Market Share Cap Solution

The analysis suggests implementing market share caps similar to those used across multiple Indian sectors. A proposed cap of around 50% on annual project awards to any single entity would prevent over-concentration while preserving leadership roles.

The recommended structure involves capping under-construction transmission market share, where developers remain eligible for new ISTS projects only when their share of ongoing capex stays below 50% of total under-execution projects. Developers exceeding the threshold would continue existing projects but pause new awards until their share naturally decreases.

The approach aims to distribute execution load across multiple capable firms and reduce risks that one portfolio's delays could slow entire clean-energy development timelines.