Manish Tewari | Too Big To Compete: How Duopolies Are Killing India’s Markets

India often celebrates itself as one of the world’s most energetic and competitive economies. But behind the glow of GDP numbers and start up success stories, a worrying pattern is solidifying. Entire industries are quietly slipping into the grip of two dominant players. From aviation and e commerce, to digital payments and food delivery, duopolies have become the hidden architecture of India’s modern economy. This is not just an abstract concern for economists, it affects millions of consumers who now face fewer choices, rising prices and dwindling accountability.

IndiGo impunity: The recent meltdown at IndiGo Airlines illustrates how excessive market power can turn dominance into impunity. In early December 2025, IndiGo cancelled more than 2,000 flights in just two weeks. The disruption left travelers stranded across the country, but what made the crisis truly alarming was the near absence of alternatives. With IndiGo controlling about 65 per cent of India’s domestic aviation market, and Air India capturing most of the rest, no other carrier had enough capacity to absorb the shock. Fares on available flights surged, effectively imposing what passengers called a “dominance tax”. Despite massive inconvenience, IndiGo faced little immediate consequence or compensation pressure.

The growing reach of market concentration: The extent of concentration across critical sectors is both broad and severe. In more than a dozen industries, two firms control between 55 per cent and 100 per cent of total market share. The food delivery market is practically a two horse race: Zomato and Swiggy together command around 95 per cent of all orders, leaving restaurants with no choice but to depend on their platforms, often at punishing commission rates. The digital payments ecosystem tells a similar story, with PhonePe and Google Pay accounting for nearly 80 per cent of Unified Payments Interface (UPI) transactions.

Aviation is even more striking: IndiGo and Air India together hold roughly 85 per cent of domestic traffic. In e commerce, Amazon and Flipkart capture about three quarters of online retail sales. Entertainment ticketing is led by BookMyShow and District; ride hailing by Uber and Ola; and even India’s securities depositories are split entirely between CDSL and NSDL. This pattern is no coincidence — it shows a systemic drift towards market structures where two players effectively define the terms of competition.

Subtle collusion, visible harm: Unlike traditional cartels, duopolies distort markets through tacit coordination, producing near-identical pricing, limited differentiation, and weak incentives to innovate. The food delivery sector is a case in point. Restaurants routinely face commissions of 20-30 per cent, sometimes higher. Many small outlets call these charges unsustainable but cannot afford to leave the platforms because 95 per cent of their customers arrive through these apps. Platform power is used strategically: restaurants that agree to exclusive partnerships get lower commissions, while those who resist face steep penalties or poor visibility on the app.

In e commerce, the Competition Commission of India (CCI) has previously found that Amazon and Flipkart favored certain “preferred sellers”, ensuring their listings outranked competitors through algorithmic tweaking. This effectively buried thousands of smaller vendors. Though FDI rules prohibit platforms from controlling inventory, these companies managed to do so indirectly for years, reducing space for genuine marketplace competition.

Digital payments, meanwhile, raise systemic risks that go beyond market fairness. When two companies handle over 80 per cent of daily UPI transactions, even a technical failure at one could paralyze retail payments nationwide. Dependence of national infrastructure on a duopolistic backbone creates fragility that standard competition rules struggle to address.

Why existing laws fall short: The Competition Commission of India has become more active in recent years, penalising global firms such as Google, Amazon and Flipkart and ordering probes into IndiGo’s practices. Yet enforcement remains largely reactive. Under the Competition Act, 2002, the CCI can intervene only after harm has occurred, by which time market power is often entrenched and difficult to undo.

Deterrence is also weak. Although the Act permits penalties of up to 10 per cent of average turnover, these fines are rarely sufficient to alter the conduct of highly profitable digital platforms. Enforcement delays further blunt impact: only a small fraction of penalties is actually collected, as prolonged appellate proceedings postpone payment for years. This ex-post, case-by-case framework is ill-suited to fast-moving digital markets where dominance can solidify rapidly.

Modernising competition law: Duopoly dominance is most damaging in digital markets, where network effects, data control and switching costs entrench power and make smaller businesses dependent on gatekeepers. To address this, the Digital Competition Bill (DCB) proposes ex-ante oversight of “Systemically Significant Digital Enterprises,” shifting India’s framework from reactive penalties to preventive regulation.

Conceptually, this mirrors the European Union’s Digital Markets Act, but India’s adaptation must remain sensitive to local realities. The goal is not to punish scale, but to make scale accountable- to ensure that dominant platforms enable rather than extinguish competition. Unfortunately, the Bill was recently sent “back to the drawing board” after industry consultations raised implementation concerns. While careful refinement is justified, prolonged delay means India stays stuck with outdated tools while market concentration deepens.

Restoring the spirit of the market: India’s growing duopoly crisis demands immediate and systematic intervention, not incremental fixes. Four measures are essential.

First, Parliament must urgently pass the Digital Competition Bill. Still in draft form, the bill introduces ex-ante regulation of Systemically Significant Digital Enterprises, curbing self-preferencing and exclusionary practices before dominance becomes irreversible. However, the legislation must not be a mechanical transplant of foreign models. It should be India-specific, calibrated to a fast-growing economy, and designed to preserve competitive fairness without stifling domestic innovation, startups, or the global expansion of Indian companies. Unlike the reactive framework of the Competition Act, this approach prevents market foreclosure rather than merely punishing it after the damage is done.

Second, the Competition Commission of India must be institutionally strengthened. Parliamentary committees have already highlighted how budgetary constraints and staffing gaps delay investigations. Enhanced funding, recruitment of digital-market specialists, and mechanisms such as mandatory penalty pre-deposits are necessary to ensure enforcement is swift, credible and deterrent.

Third, targeted sectoral interventions are required. Digital payments need enforceable interoperability standards to mitigate systemic risk when two players control most UPI transactions. Food delivery and e-commerce platforms must be mandated to disclose algorithmic ranking criteria and commission structures to prevent opaque and arbitrary exercise of dominance.

Fourth, consumer protection frameworks must be recalibrated for concentrated markets. Where competition fails, law must step in through mandatory service standards, transparent pricing and expedited redressal. The IndiGo cancellation crisis exposed these gaps.

Unchecked duopolies turn private power into public vulnerability. They dictate terms not only to customers but to entire ecosystems of smaller businesses. A competitive economy cannot thrive when choice becomes an illusion. Strengthening India’s competition framework is therefore not just about regulation, it is about safeguarding economic democracy itself.