Phuket Incident Shows Why DGCA May No Longer Be Fit To Regulate India’s Aviation Boom

By Neelam Mathews

What?

The Directorate General of Civil Aviation (DGCA) issued 382 show-cause notices between 2024 and mid-2026, but those resulted in only 51 enforcement actions. 

At the same time, thousands of deficiencies identified during inspections remain unresolved, while the same classes of violations keep appearing across airlines.

So the Phuket incident with the Air India flight doesn’t come as a shocker. It exposes how the regulator isn’t able to keep up. 

“It’s a system built to meet minimum compliance, not to prevent the next accident,” said Amit Singh, an internationally recognised aviation expert, former IndiGo captain and founder of Safety Matters Foundation, told The Core.

This is becoming harder to ignore as India’s aviation market expands. 

Why?

A country with a 300-million-passenger market cannot depend on a regulatory system whose manpower and enforcement capacity have failed to keep up with growth.

Data from DGCA’s various disclosures show how grave the problem really is.  

DGCA detected 4,692 safety deficiencies up to April 2025, according to a Parliamentary Committee. Only 945 had been closed, leaving 3,747 pending. The committee also flagged recurring defects in half of the audited aircraft and described weaknesses in DGCA’s surveillance and closure mechanisms.

In 2025, DGCA identified 23 safety lapses at IndiGo, including training gaps and procedural violations. By February 2026, 148 IndiGo aircraft had been identified with “repetitive defects.” 

Preventing that finding from appearing again requires surveillance, manpower and credible consequences. This is something that the regulator seems to be struggling with.

For instance, the DGCA requires airlines to randomly test at least 10% of their total pilot workforce every year. The Federation of Indian Pilots has argued that the coverage should be increased.

In a letter dated August 17 to the DGCA, which the author has viewed, FIP recommended raising psychoactive-substance testing coverage to at least 25%, allowing repeat selections. 

It also proposed oral-fluid testing alongside the urine testing currently conducted, arguing that it could increase testing capacity, reduce operational disruption and facilitate rapid testing at airports and other operational locations.

The issue is whether the system has enough capacity to enforce it consistently.

Oversight is thin, incidents get quietly downgraded, and co-pilots avoid reporting senior-pilot errors for fear of backlash, he explained.

Captain CS Randhawa, president of the Federation of Indian Pilots and a former deputy chief flight operations inspector at DGCA, told The Core, “DGCA works in collusion with airlines, and safety takes a back seat.”

What Now? 

No matter how efficient, even the most aggressive regulator cannot inspect aircraft, investigate incidents and follow up on violations without enough people.

The DGCA had 1,630 sanctioned positions against 843 working positions as of January 2026, leaving 787 vacancies.

The shortage has persisted for years.

This brings the debate back to something that has been discussed in India for over a decade – an autonomous civil aviation authority (CAA).

DGCA’s current structure, embedded within the Ministry of Aviation, dependent on government staffing rules, and limited in enforcement powers, cannot match the scale, complexity, and safety demands of the world’s third largest aviation market. 

A genuinely autonomous CAA would have independent hiring powers, its own budget, stronger enforcement authority and greater freedom to recruit technical specialists at market rates.

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32%

That’s how much producer prices for air passenger services rose in the April-June quarter from a year earlier, according to India’s new Service Producer Price Index (PPI). The index tracks the prices service providers receive for their output, offering a view of price pressures on the supply side of the economy.

PPI by sector:

• Air passenger services: 31.94%

• Banking service contribution: 6.90%

• Pension fund management: 5.20%

• Railway passenger services: 3.50%

• Insurance: 0.98%

• Telecom: 0.72%

• Securities transactions: -1.32%

The Lead: Air travel was a striking outlier; the surge comes as the West Asia conflict has forced airlines to take longer routes, increasing fuel consumption and operating costs, while disruptions have also squeezed capacity on some routes.

But strong travel demand has given airlines room to pass these costs on to passengers. 

Going ahead, the next PPI readings will show whether the surge persists as airlines restore capacity and route disruptions ease. If fuel and operating costs remain elevated, air travel could continue to be a major source of price pressure in the services economy.

India-Iran Trade Faces Fresh Disruption

India’s trade with Iran could face fresh pressure as new U.S. sanctions and the UAE’s suspension of trade with Tehran threaten a key route used by Indian exporters, Reuters reported.

Fast Facts: Rice, tea and pharmaceutical shipments could face higher costs and payment challenges if the disruption persists. 

Much of the trade has been routed through Dubai in recent years. Exporters are looking at alternative jurisdictions such as Turkey, but payment and logistics costs could rise.

Context: India exported $383.11 million of rice to Iran in the first half of 2026, making Iran the second-largest overseas market for premium rice, including basmati.

Tea exports stood at $14.34 million during the same period.

Bilateral trade has fallen more than 90% from its 2018/19 peak of $17 billion, with current exports largely limited to goods covered by humanitarian exemptions.

Exporters expect direct shipments to increase if the UAE trade route remains disrupted, but higher freight, insurance and payment costs could weigh on shipments.

Tamil Nadu Drops New Airport Plan

Tamil Nadu will not build a second airport near Chennai, Chief Minister Joseph Vijay said Monday, opting for alternative sites with less impact on farmland. The earlier government had already secured approval to build the airport at Parandur for Rs 274 billion, but farmers had strongly opposed it.

Setup: Tamil Nadu makes up about 15% of India's factories and manufacturing jobs, the most of any state. Chennai is home to factories run by Hyundai, Renault, and Apple supplier Foxconn and Tata Electronics.

What's Next: The industry group Confederation of Indian Industry said the government must quickly pick a new site to keep supporting this growth.

Tamil Nadu will expand its existing Chennai airport to handle 55 million passengers a year, up from 30 million. The state also signed nearly 100 investment deals worth Rs 674.52 billion in August, including from Saint-Gobain, Titan, and Super Micro Computer.

Gold Hits Fresh High

Gold prices climbed to a more than three-month high, with spot gold reaching $4,649 an ounce, as a weaker US dollar and lower Treasury yields boosted demand for the precious metal. Investors are also awaiting US inflation data and a speech by Federal Reserve Chair Kevin Warsh on Friday for clues about the US central bank’s interest-rate path.

How We Got Here: Geopolitical tensions, including the prospect of fresh US sanctions on Iran, have also strengthened gold’s appeal as a safe-haven asset.

Context: Gold loans have surged in India, with their share of retail credit rising to 11.1% from 5.9% in 2022. The total value of gold-loan originations has also increased fivefold over the same period. As The Core previously covered, the boom may be less a sign of households unlocking wealth and more a signal of financial stress, with borrowers increasingly turning to their gold holdings for liquidity.

Tyre Makers' Margins to Dip

Indian tyre makers' operating margins are set to moderate to around 12% this fiscal from 14.2% last fiscal, as raw material inflation, driven by the West Asia conflict and tight natural rubber supplies, outpaces staggered price hikes, according to Crisil Ratings.

The Core earlier reported how rising raw material costs are squeezing tyre makers' margins, even as the industry sees demand staying resilient through FY27.

Critical Moment: Natural rubber prices jumped to Rs 275/kg in June 2026 from Rs 220/kg, while crude-linked inputs like synthetic rubber and carbon black also rose.

The Lead: The squeeze is expected to be transitory. Sustained replacement and OEM demand, GST rationalisation, and gradual cost pass-through should help margins recover to 13-13.5% next fiscal, Crisil's Anuj Sethi said.

Volume growth is projected to normalise to 4-5% this fiscal. Strong balance sheets should keep credit profiles stable, Crisil said.

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