This is a nuanced topic. Earlier when AI was under govt. control, it had subpar service and bad airplanes with broken interiors. Tata is trying to fix it, but it will take mid 2025 or end-2025 to fix those issues. Supply chain issues are prevent quick fixes. And, both AI/AIX under Tata's and Indigo want to grow as international airlines. Indian govt. forces all domestic airlines to allocate 10% seats to NE India. This is a big burden on them.
Emirates, Qatar, Etihad (ME3) are funded by their respective governments. The first one is profitable but the last two may or may not be profitable and their governments pump a lot of money into them. So there is no level playing field. They also have the geographical advantage because longer flights from India to the USA are more expensive to operate due to the weight of extra fuel they have to carry.
Under Manmohan govt. ME3 got a lot of flying rights into many airports in India. This is not a bad policy per se, because it provides the best experience for the Indian consumer. At that time trade liberalization was in vogue and our airlines were very small. In return, they offer very little to Indian airlines. Dubai doesn't give our airlines slots in their main airport and only asks them to use their secondary airport. Prime time slots in ME3 airports are all used only by their airlines. Even US airlines complain a lot about ME3. But because the US domestic market is such a big one, for US airlines ME3 market is a small bucket.
Most of the passengers on ME3 flights are from India. So ME3 take a big chunk of India market. If India gives free ride to ME3 and lets them fly to all airports, it won't be possible for AI and Indigo to go beyond their current status. So India is not letting them fly more flights to India. So don't expect direct flights to Dubai from AP anytime soon.
India also needs to step up its game and make the passenger experience world-class in its airports like Delhi and Bombay. So passengers won't feel a difference if they do their transfer in Delhi or Dubai. Then Delhi and Bombay can serve Europe-SE Asia traffic and help Indian airlines scale up. It also needs to scrap the 10% seats to NE India policy and come up with Udan like scheme.