Zomato, Swiggy Slip As New Labour Codes Kick In; Brokerages See Limited Long-Term Hit

Shares of major e-commerce and delivery companies like Zomato (now Eternal Ltd.) and Swiggy experienced a dip on Monday, November 24, 2025, following the implementation of India's new labour codes last week. These codes, which replace 29 existing labor laws, mark a significant shift in the country's labor landscape, particularly for gig and platform workers. For the first time, "gig work," "platform work," and "aggregators" have been formally defined in law.

The primary concern driving the stock decline is the anticipated increase in operating costs for these labor-intensive businesses. The new regulations require aggregators to contribute 1-2% of their annual turnover towards a social security fund for gig workers, capped at 5% of the amount paid or payable to them. This fund will provide benefits like insurance, accident compensation, and other social security measures, which will be portable across states.

The new labour codes aim to extend formal protections to gig and platform workers, granting them access to benefits like provident fund, ESIC coverage, insurance, and mandatory appointment letters. All workers are now entitled to minimum wages, salary credit by the 7th of each month, double wages for overtime, and mandatory appointment letters. The government will also roll out an Aadhaar-linked Universal Account Number (UAN) to ensure easy access and portability of welfare benefits for gig workers across India.

Despite the initial market jitters, several brokerages maintain a positive long-term outlook. Bank of America views the labor codes as a major step towards formalization, scale, and wider social security, which will bolster organized employment, support financial inclusion, and boost manufacturing under the "Make in India" initiative. Citi shares a similar sentiment, considering social security coverage for gig workers a healthy development for the broader ecosystem.

While the new regulations will lead to higher operating costs, analysts estimate the impact on adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be between 4% and 10% across the sector, suggesting a manageable hit. Urban Company, which already pays its service partners relatively well, could see a contribution increase of up to Rs 47 per order if calculated at the 5% payout threshold.

The implementation of these codes is a move towards formalizing a rapidly growing segment of the Indian workforce. India had 77 lakh gig workers in 2020-21, and projections estimate this number will rise to 2.35 crore by 2029-30. For companies like Zomato and Swiggy, this entails a necessary shift from a purely transactional relationship with gig workers to one that involves social responsibility.

Several companies have expressed their support for the new labor codes. A Rapido spokesperson stated that strengthening social security for gig and platform workers is vital for long-term resilience and inclusion. Eternal Ltd. believes the codes will strengthen social security access without harming business viability, while Zepto stated the move protects workers without compromising the flexibility that powers quick commerce.

The key challenge now lies in the operationalization of the contribution mechanism and the effective delivery of benefits to the workers. Experts caution that applying a formal benefits system to a workforce defined by flexibility and varying work hours could complicate documentation and benefit continuity. Real-time compliance and grievance resolution at scale will require robust digital systems and behavioral changes.

Overall, the new labor codes represent a significant step towards providing social security and better working conditions for India's growing gig workforce. While companies like Zomato and Swiggy will face increased operating costs in the short term, brokerages believe the long-term benefits of formalization and a more secure workforce will outweigh these costs.