Synopsis:
Analysts expect new labour rules to raise gig-worker welfare costs but see only a moderate impact on profitability. While quick commerce may feel more pressure due to higher fulfilment expenses, platforms can offset costs through pricing and efficiency, keeping long-term growth and margin prospects largely intact.
The Indian e-retail food delivery sector is booming, driven by rapid urbanisation and increasing smartphone usage. Valued at around USD 45 billion in 2024, it is expected to grow at a CAGR of over 20%, potentially reaching close to USD 140 billion by 2030. Increasing demand for convenience, diverse cuisines, and expanding tier 2 and 3 city penetration fuel this surge.
Swiggy Ltd traded at Rs 389 per share, valuing the company at about Rs 97,002 crore. In comparison, Eternal Ltd traded at Rs 303.85 per share but commanded a significantly larger market capitalisation of Rs 2,93,081 crore.
Labour Law
The government’s new labour rules mandate that food delivery and quick-commerce platforms contribute 1–2% of their annual turnover toward gig-worker welfare, capped at 5% of payouts made to riders. The contributions will flow through state welfare boards and existing schemes, marking a major step toward formal social security for platform workers. Implementation of the Code on Social Security (CoSS) with effect from November 21, 2025.
Morgan Stanley, a well-known brokerage, believes the new labour codes could raise operating costs for delivery platforms, pressuring short-term sentiment. With gig work now formally defined, companies must contribute 1–2% of turnover, potentially increasing cost per order by Rs 1.5– Rs 2.5 across food delivery and quick commerce.
The brokerage estimates a 4–10% EBITDA impact for major platforms but notes the financial burden may be shared among customers, merchants and ecosystem partners. While profitability may soften initially, pricing adjustments and operational efficiencies could help companies absorb regulatory costs over time.
Alongside, Bernstein expects only a mild earnings impact for Swiggy and Eternal, projecting a 25–70 bps EBITDA reduction under the new labour rules. It notes that quick-commerce businesses face higher sensitivity due to heavy rider and warehouse costs, while food delivery remains structurally stronger and already unit-profitable for Swiggy.
The brokerage highlights that higher fulfilment expenses offset the stronger revenue per order at Blinkit and Eternal. Existing insurance coverage may soften added regulatory costs, and long-term profitability should stay intact as platforms adjust pricing. Bernstein retains its ‘Outperform’ rating on both companies, reflecting confidence in their growth and margin resilience.
Conclusion
Overall, India’s new labour codes introduce short-term cost pressures for food delivery and quick-commerce platforms, but analysts believe the long-term outlook remains stable. With pricing adjustments, operational efficiencies and existing insurance buffers, profitability is expected to hold. Both brokerages agree that structural demand and sector growth continue to support platform resilience.
Written by Abhishek Singh
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