OPINION | The case for capping market share to minimise systemic risk in India

India employs market share caps across multiple sectors.

Early December 2025 brought India’s aviation sector to a standstill. IndiGo, commanding over 65% of the domestic market, cancelled thousands of flights across the country. The Directorate General of Civil Aviation intervened, forcing the airline to cut its winter schedule. More tellingly, the Competition Commission of India has begun examining whether IndiGo violated the Competition Act, which prohibits abuse of dominant position.

Flip side of overwhelming dominance

The episode exposed what happens when a single entity becomes indispensable to an entire sector. When IndiGo stumbled, there were no meaningful alternatives to absorb the disruption, and what began as an operational lapse cascaded into a systemic crisis.

This pattern repeats across sectors where market concentration reaches excessive levels: reduced competition leads to operational complacency, execution bottlenecks, and ultimately, harm to consumers and the sector itself.

Power transmission’s market structure poses a systemic risk 

India’s power transmission sector now faces a similar concentration risk, with Power Grid Corporation of India Ltd. controlling more than half of all inter-state transmission projects awarded under competitive bidding, raising questions about whether excessive dependence on one executor could slow the country’s clean energy transition.

Lessons from the telecom sector

India’s telecommunications sector learned this lesson the hard way. What was once a vibrant market with multiple operators has consolidated significantly. As of September 2025, according to TRAI data, the market has become highly concentrated with a dominant duopoly structure. The consequences of such concentration became evident in August 2025 when the most affordable entry-level plans were discontinued across the sector, forcing consumers onto higher-priced alternatives.

Even Union Telecom Minister Jyotiraditya Scindia acknowledged publicly that excessive concentration among a limited number of carriers is inadequate for a healthy market.

Recognising these risks early, the Telecom Regulatory Authority of India recommended spectrum caps – limiting operators to 50% of spectrum in any single band and 25% across all bands – which the Department of Telecommunications subsequently implemented.

These caps were designed when India had 6-10 telecom operators per circle, intended to prevent any single player from cornering the market and ensure multiple credible competitors could emerge. The caps were not imposed arbitrarily but emerged from hard experience showing that excessive concentration stifles innovation, raises prices, and creates systemic vulnerabilities.

Niti Aayog flagged concentration risks in airport sector

The airport sector shows similar concentration patterns. In recent years, significant consolidation has occurred in India’s airport industry, with concerns emerging about the concentration of airport assets among a limited number of operators. This mirrors the concentration risks observed in other infrastructure sectors.

The Finance Ministry and NITI Aayog raised red flags about this concentration, yet no regulatory caps were imposed. This contrasts sharply with the United Kingdom, where the Competition Commission in 2009 forced BAA to divest three airports – Stansted, Gatwick, and Edinburgh – after finding that its control of 81% of London’s runway capacity harmed competition.

Downside of Power Grid’s dominance

This is precisely what is now unfolding in India’s power transmission sector. Power Grid Corporation of India Ltd. has consistently secured more than half of all inter-state transmission projects awarded under tariff-based competitive bidding. This dominance is reinforced by a large portfolio of Regulated Tariff Mechanism projects, placing PGCIL at the centre of nearly the entire national expansion programme. PGCIL alone is currently handling 46 of the 91 ISTS projects under construction, with a cumulative value exceeding Rs. 1.27 lakh crore.

The consequences mirror what we saw with IndiGo. This massive backlog has translated into delays ranging from 18 to 30 months across crucial projects in Rajasthan, Gujarat and Andhra Pradesh. One transmission scheme designed to evacuate 8.1 GW of solar energy from Rajasthan, parts of which were expected to be operational as early as 2022, remains incomplete even today. Rajasthan alone saw nearly 4 GW of clean power curtailed between March and August 2025, with curtailment levels rising from 8.5% to over 50% in a matter of months. Similar patterns have emerged in Gujarat, Maharashtra and Tamil Nadu.

It's not about efficiency, it’s about de-risking

This is not a criticism of PGCIL’s capabilities or contribution to building India’s grid. It is a recognition that relying too heavily on one institution at the current scale introduces avoidable structural risk. Just as IndiGo’s operational challenges paralysed India’s aviation sector, and the telecom duopoly exercises pricing power without meaningful competition, excessive concentration in transmission threatens to bottleneck India’s entire clean energy transition.

Market share cap is the solution

The solution already exists in regulatory practice. India employs market share caps across multiple sectors. A similar approach is needed for transmission. Capping the annual share of projects awarded to any single entity at around 50% would prevent over-concentration while preserving PGCIL’s leadership role. This could be structured as a cap on under-construction transmission market share, where a developer remains eligible to bid for new ISTS projects only when its share of ongoing capex stays below 50% of the total under-execution projects. If a developer crosses the threshold, it continues executing existing projects but pauses from new awards until its share naturally falls. This spreads execution load across multiple capable firms and reduces the chance that one portfolio’s slippage slows the entire clean-energy timetable.

Market concentration is not inherently problematic. Economies of scale matter, and large players often drive efficiency gains. But there is a threshold beyond which concentration becomes a systemic risk rather than a competitive advantage.

The evidence from aviation, telecommunications, and transmission sector delays suggests that this threshold lies well before any single entity approaches two-thirds of a market, and certainly before one entity controls more than half of an entire sector's under-construction pipeline.

India has successfully built competitive markets in renewable energy, digital payments, and other sectors by learning from past mistakes. The lesson from IndiGo’s disruption, the telecommunications duopoly, and transmission sector bottlenecks is clear: when one player controls too much, everyone pays the price. Introducing market share caps now, before concentration hardens further, is not about limiting success. It is about ensuring that India’s clean energy ambitions are not held hostage to any single entity’s bandwidth constraints.

(Shriram Subramanian is Founder and MD, InGovern Research Services.)

Views are personal, and do not represent the stand of this publication.