Swiggy, Zomato say new labour code won’t hurt business, analysts see rising cost
NEW DELHI: Swiggy and Eternal (formerly Zomato) told exchanges that India’s new labor laws, which came into force with immediate effect on Friday, will not have any “material impact” on their business. But analysts say the math points in the other direction: Once mandatory contributions, namely the Social Security Act 2020 (CoSS), come into play, taxes are likely to increase operating costs in food distribution and fast-track trade; During this period, both platforms have little space to absorb new shocks.
Under the 2020 Social Security Law, platforms must contribute 1-2% of annual turnover to a special social assistance fund, limited to 5% of payments to temporary workers. Analysts are working at the upper end of the range, and their models suggest the tax would increase per-order costs by: ₹2-3 and add billions of dollars in annual expenses. Given where profitability is today, it is almost certain that the burden will fall directly on customers.
In an emailed response, Eternal said: “…we do not anticipate that any financial impact from these Rules will harm the long-term health and sustainability of our business…” Mint On November 24th. Swiggy did not respond to queries by press time.
The rules’ contribution rules have not yet been officially communicated, but brokers are already factoring in the impact. JM Financial predicts tax will increase ₹2.1-2.5 per order for both food delivery and express trade. Applied to Fiscal Year 26 volumes; this carries additional meaning ₹4.3 billion for Eternal and ₹2.6 billion at the consolidated level for Swiggy.
It is inevitable to convey this to customers
Analysts say the cost is unlikely to be covered and almost certainly will be.
“This is a meaningful amount given that these aggregators are far from their own sustainable profitability guidance…companies will eventually pass the additional burden on to their end customers rather than absorb the impact,” JM Financial said in a note. he said.
This consumer direct shift comes on top of a host of recent charges: platform or transaction fees ₹13-15, small order fees, rush hour and surge fees, and GST adjustments for local delivery. Fresh ₹2-3, making this the fourth price increase tool in 18 months; It’s a pattern that customers are slowly getting used to, although low-value orders remain sensitive.
Passenger costs increase significantly with a 5% tax on payments. Elara Securities’ Karan Taurani said Eternal’s gross merchandise value (GMV) will increase from 9.8% to 10.3%, while Swiggy’s will increase from roughly 11.6% to 12.2%.
GMV reflects the total value of orders flowing through the app, excluding discounts and fees.
Even small cost increases due to GMV are significant for companies still hemorrhaging money. Swiggy reported an EBITDA margin of (-)19% in the latest filings. Eternal’s adjusted EBITDA for Q2FY26 was: ₹224 crore, down 32% year-on-year. Both currently spend about 1% of their income on business insurance; accident insurance ₹10 lakh and medical cover ₹3-4 lakhs. Taurani said a 2% mandate would double that.
Structural friction points
Beyond the financial hit, implementation can be complicated.
Passengers frequently switch between apps, making it difficult to track contributions. Multiple business models blur the link between turnover and employee compensation. The shift to 1P, first-party inventory-focused models, increases revenue and can broaden the tax base. Food distribution and express trade operate on fundamentally different economies, making it difficult to implement a uniform framework, Taurani said.
Swiggy’s revenue increased by 54.4% YoY ₹5,561 crore in the second quarter of 22026 ( ₹3,601 crore), but its net loss ₹1,092 crore. Eternal’s revenue increased 183% year over year ₹13,590 crore (from inception) ₹4,799 crore), but net profit fell 63% ₹65 crore.
Rising average order values provide some buffer. Swiggy’s net adjusted order value (NAOV) is approx. ₹385 in food distribution and ₹488 in flash trading; Eternal’s food delivery NAOV is similar on: ₹385 and Blinkit are around ₹520. A ₹2-3 taxes are only a small part of these expenses.
“This may negatively impact demand in the short term, but may moderate in the near term as AOV develops,” Taurani said.
What do the rules provide?
The new law on the social security framework brings gig and platform workers under a formal social safety net for the first time, enabling accident insurance, life insurance, disability benefits, maternity support, health programs and old-age protection. The government has stated that the provision of benefits can be channeled through existing mechanisms such as AB-PMJAY (Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana) and state welfare boards.
Eternal committed insurance value ₹700 million and Swiggy approx. ₹180 million for gig workers in the latest financial period. Eternal has around 555,000 delivery partners on Zomato and 339,000 on Blinkit; Swiggy and Instamart together have around 691,000 delivery partners as of FY26.
