Why India’s Regional Airports Like Shivamogga Are Struggling To Survive

By Zinal Dedhia

What?

Shivamogga airport in Karnataka is facing an uncertain future as its only remaining airline, Star Air, approaches the end of its three-year government subsidy on November 20. The airline has yet to confirm whether it will continue operating beyond the viability gap funding (VGF) period under the Centre’s UDAN scheme.

The uncertainty follows the withdrawal of IndiGo and SpiceJet earlier this year, leaving Star Air as the airport’s sole operator. Despite passenger demand, operational constraints have made it difficult for airlines to sustain services.

Why?

Shivamogga’s predicament highlights a larger problem with India's regional aviation push: building airports and subsidising routes is easier than ensuring flights continue once government support ends.

Airline withdrawals have been linked to aircraft and pilot shortages, rising aviation turbine fuel costs, operational restrictions and geopolitical disruptions affecting supply chains.

The Karnataka government has proposed 13 routes from Shivamogga under the next phase of UDAN, with subsidies expected to extend from three to five years. Route allocations are expected around January 2027, though new operators and service timelines remain uncertain.

What’s Next?

The Centre is attempting to address the sustainability challenge through Modified UDAN, approved in March 2026, with an outlay of Rs 28,840 crore over ten years. The scheme aims to develop 100 new airports and 200 modern helipads.

Vijai Agrawal, former Airports Authority of India (AAI) official, believes the earlier three-year subsidy period was too short. “In the first one or two years, people may not even know that there is a flight. Only when the service operates continuously do tourists and other passengers start planning to use it,” he said.

A longer subsidy window may give airlines more time to build demand. But can five years of government support make routes commercially viable, or will regional airports continue to lose airlines once the subsidies dry up?

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Last year, according to Roku internal data, holiday content searches on Roku saw an 86% increase during October. And in November, those searches rise an average of 39% weekly. This surging holiday spirit is mirrored by consumer activity, as about half of Roku streamers shopped Black Friday and Cyber Monday deals in 2025.

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Rs 62,370 crore

That's the value of fertiliser subsidy allocation the Union Cabinet has approved for the October 2026-March 2027 winter crop season, 64% higher than the Rs 37,950 crore budgeted for the previous year's season.

The subsidy covers phosphatic and potassic fertilisers, including di-ammonium phosphate (DAP), under the Nutrient Based Subsidy scheme.

The Lead: Geopolitical tensions have disrupted global fertiliser supply chains and pushed up prices of key inputs. India relies heavily on imports to meet its fertiliser requirements, leaving farmers exposed to international price fluctuations. 

Future: The higher allocation aims to shield farmers from rising global prices and ensure adequate fertiliser supplies during the rabi season, when they sow wheat, pulses and other winter crops. 

This support is particularly important as farmers face uncertainty over weather conditions, including the risk of El Niño affecting rainfall and crop yields. The increased allocation also adds to the government's fertiliser subsidy burden.

Diwali Phone Sales Slump

India’s mobile retail market had a subdued Diwali, with sales volumes falling even as retailers managed to match last year’s revenue.

According to the All India Mobile Retailers Association (AIMRA), unit sales dropped 18-20% during the festive period as higher average selling prices supported overall sales value.

Background: Business in the seven days before Dhanteras and Diwali was particularly weak, with volumes falling nearly 40%. Demand picked up during the five-day festive period, but urban consumers remained cautious about upgrading their phones. Tier 1, 2 and 3 markets saw stronger demand, especially in the Rs 30,000-60,000 segment.

Apple, Xiaomi and Google Pixel performed well, while Realme saw volumes fall more than 50%. Vivo, OPPO and Samsung maintained turnover but faced weaker unit sales.

The Core had reported previously that smartphone sales had been hit by rising prices, as higher memory chip and component costs have made new devices less affordable, prompting consumers to delay upgrades and replacements.

Projection: With phone and component prices set to rise, AIMRA expects mainline retail volumes to fall by up to 50% over the next three months.

It has called for price parity between online and offline channels and better financing support for retailers.

Scotch Stuck At Indian Ports

Indian customs is holding dozens of containers of bulk Scotch imported by Pernod Ricard and Diageo, as investigators press for a 150% tariff, Reuters reported, citing four people with knowledge of the matter and a confidential government memo.

The companies rely on a government assurance of a lower duty under the India-UK trade pact.

Background: This is the first major dispute linked to the trade deal, which took effect in July. Investigators say the pact's reduced 75% duty applies only to finished products like bottled Scotch, not to bulk concentrates.

India's commerce ministry assured senior executives on November 2 that it would honour the pact. But a November 4 memo from the finance ministry's Directorate of Revenue Intelligence, reviewed by Reuters, asks customs commissioners to keep applying the 150% duty.

Projection: Pernod and Diageo each have more than 40 containers stuck at ports, and Bacardi has five, according to Reuters' sources.

Tax officials have also searched several company offices and questioned executives. About 80% of Scotch imports from Britain by volume arrive in bulk. A senior finance ministry source said the two ministries are discussing a resolution.

Love, Lies And Nvidia

Nvidia has lost around $430 billion in market value over two trading sessions following allegations that CEO Jensen Huang’s affair with a Chinese businesswoman may have exposed the chipmaker to export-control violations and espionage risks.

The Turning Point: Alice Huang, suspected by US intelligence of links to Beijing, allegedly used her connections with Jensen Huang and Nvidia distributors to facilitate shipments of 240,000 restricted AI chips, worth at least $7.5 billion, to Chinese firms. Huang admitted to the affair and apologised to employees on November 8. The board has launched an independent investigation, while the FBI is examining possible Chinese intelligence involvement.

Impact: Beyond reputational damage, the controversy raises questions about Nvidia’s dependence on Huang, who has led the company for 33 years and has no clearly designated successor, as reported on The Core Report. Any evidence of compromised security could invite tighter US export restrictions and disrupt global AI supply chains.

Milk Prices On The Rise

Mother Dairy has raised milk prices by Rs 2-4 per litre from Thursday, November 12, because of rising input costs.

The company, the largest milk supplier in Delhi-NCR, last raised prices on May 14, 2026. Full cream pouched milk now costs Rs 76 per litre, up from Rs 72, and toned pouched milk is Rs 62, up from Rs 60.

Impact: The price paid to farmers for milk has gone up, so the company is passing part of the increase on to consumers.

Mother Dairy gives 75-80% of its milk sales realisation to farmers. The hike suggests companies are starting to push rising costs onto customers. Until now, many had been absorbing them.

Background: FMCG companies have already started passing on costs. HUL raised prices by 2-5% in the June quarter, and Britannia has used smaller biscuit packs to raise effective prices.

Mother Dairy sells around 35 lakh litres a day in Delhi-NCR and more than 50 lakh litres overall.

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FPIs Have Invested $6 Billion This Month Already

On Episode 1031 of The Core Report, financial journalist Govindraj Ethiraj talks to Shashi Kumar, co-founder and CEO at Akshayakalpa Organic as well as Jason Knauf, CEO at The EarthShot Prize.

• FPIs Have Invested $6 Billion This Month Already, Highest Since September 2024

• Milk Prices Are Jumping Today, What Is The Outlook, Including For Food Inflation

• The Mahindra Group And A Body Helping Keep Roofs Cool For Women Workers Are Finalists At This Year’s Earthshot Prize

• Anthropic Launches Microsoft Office Like Tools

• Indian Airlines Saw Lower Capacity In October, The First Capacity Decline Since 2020