Not sure it will impact the gulf carriers too much
EK thrives on Indian traffic. Not just on the India-Dubai sector but mostly onwards to Europe and North America.
I reckon it could signal the end of many jobs for Indian Nationals in the Gulf ?
And where are they going to get the labor to undertake the massive constructions all over the Gulf region? Plus EK utilized almost its full quota of the bilateral rights where as the Indian carriers don't utilize even half of it. So I think further increase will only happen when ever both countries agree that they need to add more seats.
Blaming the Gulf carriers for Air Indias plight is a bit naive
Gulf carriers have not been blamed anywhere. In fact its the Indian Civil Aviation Ministry especially the former Minister Praful Patel is the one who is being blamed. The number of seats per week allotted to EK were increased substantially from 18000+ to 54000+ within a few years and during this time AI had not received its new aircraft (not that it would have done significantly better with new aircraft) and more importantly no Pvt Indian carrier was allowed to fly to the Gulf countries and compete with the gulf carriers in the name of protecting AI.
The fact that the Govt gave away all the lucrative rights to EK etc. and that they literally had no competition itself is a clear indication that some of the Ministers benefited from this.
Frankly which country would want the foreign airlines to benefit at the expense of not just the Govt owned airline but also other Pvt Indian airlines.
You have seen Canada and Germany impose some restrictions and now its about time India did the same. Not just for the sake of AI but also for other Indian carriers.