The Ministry of Labour’s implementation of the Code on Social Security, 2020, mandates that online aggregators contribute 1-2% of annual turnover, capped at 5% of gig-worker payouts, toward a dedicated social security fund covering health insurance, pension, maternity, and disability benefits for platform workers. For Eternal and Swiggy, the two largest players in India’s hyperlocal delivery space, that translates into an immediate financial hit.
JM Financial estimates that in a worst-case scenario, Eternal would face Rs 430 crore in annual contributions based on FY26 projections, while Swiggy would owe Rs 260 crore, equating to Rs 2.1-2.5 per order across their food delivery and quick commerce operations.
“We strongly believe both companies would eventually pass on the additional burden to their end customers,” JM Financial said, maintaining a BUY rating on Eternal with a target price of Rs 450 and ADD on Swiggy at Rs 460. The brokerage warned that “during the period of uncertainty, both companies could see volatile price movements in their stock.”
Morgan Stanley pegged the steady-state EBITDA impact at 4-10% across food delivery, quick commerce, and service platforms, with estimated costs of Rs 1.5-2.5 per order. Bernstein was more pointed, projecting that the new labour code “may reduce Swiggy and Eternal EBITDA by 25-70 bps,” with quick commerce margins facing greater exposure than food delivery due to higher delivery costs.
Also Read | No detrimental long term impact of gig worker code, engaging with Govt: Eternal tells shareholdersThe reforms mark the first formal legal definition of gig work, platform work, and aggregators in India—a milestone for the country’s fast-growing platform economy, but one that comes with strings attached.”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 a statement. “We have been anticipating and planning for these social security-related contributions in our businesses for a while now.”Swiggy echoed that stance, saying that it doesn’t anticipate any material impact of the rules on its business sustainability, cost structure, or long-term financial performance.
Still, the devil remains in the details. Morgan Stanley noted “some uncertainty remains on whether existing insurance costs will be counted toward the contribution,”—a critical question given that both companies already spend roughly 1% of revenue on worker insurance, according to Elara Capital.
Elara, which maintains buy call on Eternal (target price Rs 415) and accumulates on Swiggy (target price Rs 490), estimates the financial impact at Rs 2-3 per order, or 0.2-0.6% of average order value, depending on benefit levels. If benefits are pegged at 5% of gig payouts, it could add 0.4-0.6% of gross merchandise value for both players. Under a 1-2% of sales mandate, gig-worker costs as a share of GMV may climb from 9.8% to 10.3% for Eternal and 11.6% to 12.2% for Swiggy.
The brokerages expect costs to be shared across the ecosystem—distributed among customers, merchants, and workers over time. “From a customer standpoint, we do not expect any material impact on ordering behaviour if the pass-through impact is Rs 2.1-2.5 per order, basis recent absorption of other fees (such as platform fees),” JM Financial said.
Bernstein maintained an Outperform rating on both platforms, noting that while short-term margin pressure is likely, “long-term profitability view remains intact” as the industry adjusts pricing or fees to absorb incremental costs. The firm highlighted that Swiggy’s food delivery is already unit-profitable at Rs 13 per order, while Blinkit/Eternal has higher revenue per order but also elevated delivery costs.
Also Read | Mukesh Ambani crashes quick commerce party. Can Reliance disrupt Blinkit, Swiggy, Zepto’s 10-minute game?Beyond the immediate financial calculus, the broader policy shift has won plaudits from some corners. Bank of America described labour codes as a “major step towards formalization & scale,” driving organized jobs and expanding social security coverage. “Formalization of economy can pick up pace on the back of New Labour codes along with other reforms such as RERA/GST,” BofA said, calling it a “strong medium-term tailwind” for financial inclusion and a boost to manufacturing and Make in India.
But for investors in Eternal and Swiggy, whose shares have been closely watched since their public listings, the near-term outlook is clouded by regulatory uncertainty. With final implementation rules still pending and both companies engaging with regulators, the market faces a waiting game that could fuel volatility until the exact contours of compliance become clear.
