India’s markets are quietly turning into duopolies, where just two firms dominate whole sectors. This shift affects prices, choices, and long‑term growth for everyday investors.
What Is a Duopoly?
A duopoly is a market structure in which only two companies hold the majority of market share. When they control 70‑90% of a sector, competition fades and the firms can coordinate their actions without any formal agreement.
Where Duopolies Are Emerging
- Aviation: IndiGo and Air India together serve almost 90% of domestic flights.
- Food delivery: Zomato and Swiggy dominate about 95% of orders.
- Ride‑hailing: Ola and Uber are the main players.
- Digital payments: PhonePe and Google Pay hold over 80% of transactions.
- Telecom: Jio and Airtel have essentially eliminated meaningful competition.
Why It Matters for Investors
At first glance, duopolies can look attractive: they often generate stable cash flows, higher margins, and lower stock volatility. However, when competition disappears, the incentives for price cuts, better service, and innovation weaken. Over time, this can erode consumer value and limit the growth potential of the companies themselves.
Regulators Are Starting to React
Recognising the risk of too much concentration, the government has recently approved new airlines such as Al Hind Air, FlyExpress, and Shankh Air. These entrants aim to break the near‑90% control held by IndiGo and Air India. While launching an airline is difficult, the approvals signal that policymakers understand the need for contestability.
What Retail Investors Should Do
- Look beyond short‑term stability and ask how a company will stay competitive in a concentrated market.
- Consider the health of the overall ecosystem, not just a single firm's earnings.
- Stay aware of regulatory changes that could open up competition.
In short, a healthy market needs both strong players and the constant threat of new entrants. Without that balance, consumers and investors may pay the price.
Remember, this is just my perspective, not a prediction. Do your own research before making any investment decisions.