Swiggy, Zomato say new labour code won’t hurt business, analysts see rising cost
The levy for social security could add ₹2-3 per order, potentially passing billions in extra costs to customers, even as platforms race toward profitability.
NEW DELHI: Swiggy and Eternal (formerly Zomato) told stock exchanges that India’s new labour codes, rolled out Friday with immediate effect, would not have any “material impact" on their business. But analysts say the math points the other way: once the mandated contributions kick in, the Code on Social Security 2020 (CoSS), levy is likely to push up operating costs across food delivery and quick commerce—at a time when both platforms have little room to absorb fresh shocks.
Under the Code on Social Security, 2020, platforms must contribute 1-2% of annual turnover, capped at 5% of payouts to gig workers, to a dedicated welfare fund. Analysts are working with the upper end of the range, and their models suggest the levy will raise per-order costs by ₹2-3 and add billions to annual expenses. Given where profitability stands today, the burden is almost certain to be passed straight to customers.
“…We don’t think any financial impact on account of these Rules will be detrimental to the long-term health and sustainability of our business…," Eternal said in an emailed response to Mint on 24 November. Queries to Swiggy did not elicit a response till press time.
The Code’s contribution rules are yet to be formally notified, but brokerages are already factoring in the impact. JM Financial estimates the levy would add ₹2.1-2.5 per order for both food delivery and quick commerce. Applied across FY26 volumes, that translates into an additional ₹4.3 billion for Eternal and ₹2.6 billion for Swiggy at the consolidated level.
Passing it on to customers is inevitable
Analysts say the cost is unlikely to be absorbed and will almost certainly be passed through.
“This is a meaningful amount given that these aggregators are far from their own sustainable profitability guidance…companies would eventually pass on the additional burden to their end customers rather than absorb the impact," JM Financial said in a note.
That consumer pass-through comes on top of a stack of recent charges: platform or handling fees of ₹13-15, small-order charges, peak-hour and surge fees, and GST tweaks for hyperlocal delivery. A fresh ₹2-3 makes this the fourth price hike lever in 18 months, a pattern customers have gradually adjusted to, though lower-value orders remain sensitive.
At a 5% levy on payouts, rider costs rise meaningfully. Eternal’s would increase from 9.8% to 10.3% of gross merchandize value (GMV), while Swiggy’s would climb from roughly 11.6% to 12.2%, said Karan Taurani of Elara Securities.
GMV reflects the total value of orders flowing through the app before discounts and fees.
Even small GMV-linked cost increases are material for companies still bleeding. Swiggy posted an Ebitda margin of (-)19% in recent filings. Eternal’s adjusted Ebitda for Q2FY26 was ₹224 crore, down 32% year-on-year. Both already spend approximately 1% of revenue on gig-worker insurance—accidental cover of ₹10 lakh and medical cover of ₹3-4 lakh. A 2% mandate would double that, said Taurani.
Structural friction points
Beyond the financial hit, implementation could be messy.
Riders frequently switch between apps, complicating contribution tracking. Multi-business models blur the link between turnover and gig-worker payouts. The shift towards 1P, first-party inventory-led models, inflates revenue and could widen the levy base. And food delivery and quick commerce operate on fundamentally different economics, making a uniform framework difficult to apply, Taurani said.
Swiggy’s revenue rose 54.4% year-on-year to ₹5,561 crore in Q2FY26 (from ₹3,601 crore), though its net loss widened to ₹1,092 crore. Eternal’s revenue surged 183% year-on-year to ₹13,590 crore (from ₹4,799 crore), but net profit fell 63% to ₹65 crore.
Rising average order values provide some cushion. Swiggy’s net adjusted order value (NAOV) is about ₹385 in food delivery and ₹488 in quick commerce; Eternal’s food-delivery NAOV is similar at ₹385 and Blinkit’s around ₹520. A ₹2-3 levy is only a fraction of these spends.
“This may negatively impact demand in the short term, but may moderate in the near term as AOV improves," Taurani said.
What the Code delivers
The new code on social security framework brings gig and platform workers under a formal social-security net for the first time, enabling accident cover, life insurance, disability benefits, maternity support, health schemes and old-age protection. The government has indicated that delivery of benefits may be routed through existing mechanisms such as AB-PMJAY (Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana) and state welfare boards.
Eternal processed insurance worth ₹700 million and Swiggy about ₹180 million for gig workers in the most recent fiscal period. Eternal has roughly 555,000 delivery partners on Zomato and 339,000 on Blinkit; Swiggy and Instamart together have about 691,000 delivery partners as of Q2FY26.
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