But it’s not clear at all that red tape has anything to do with the problems these companies are facing.
Considering that several of the companies mentioned in the article have corporate governance issue, arguably the problem is a lack of regulation. Or at least a lack of good regulation and/or implementation of the regulation, as opposed to red tape.
This is where the 'intense competition' is dangerous part comes from. After you have spent billions on subsidising prices for the customer, newer companies come, and do the same. The customers see no issues in now buying from the newer companies. The older companies find themselves in a hard position with no profits and big debts.
In India customers are loyal to only one thing 'cheap prices'. Thats all there is to this story. Many times even if there is no real competition, you are often competing with the customers mindset itself.