ETERNAL (Formerly Zomato) and Swiggy in Focus: How Will the New Labour Laws Impact Investors?

ETERNAL and Swiggy are expected to tackle new challenges with the implementation of India’s new labour regulations. The updated rules under the Code on Social Security, 2020, require online aggregators to contribute 1–2% of their annual turnover to a new social security fund for gig and platform workers. This contribution is capped at 5% of total gig-worker payouts.

Higher Costs for Delivery Platforms Like ETERNAL (Zomato) and Swiggy

For large players such as Eternal and Swiggy, the financial hit is significant. Based on FY26 estimates, Eternal may need to contribute around ₹430 crore a year, while Swiggy may need to pay about ₹260 crore. On a per-order basis, this works out to roughly ₹2–3 for each delivery across food and quick commerce operations.

This additional cost could temporarily reduce profitability. As per news reports, the new rules may affect operating margins by 25–70 basis points. Quick commerce is expected to feel the pressure more than food delivery, as delivery costs are higher and order values are lower.

Possible Pricing Changes

Both companies to eventually share the additional cost across the ecosystem. A small fee may be passed on to customers, while merchants and workers may also absorb part of it over time. Since recent increases in platform fees did not hurt demand, consumer behaviour is unlikely to change in any major way if the per-order impact remains low.

Key Uncertainty on Insurance

One area that still needs clarity is whether existing worker insurance spending will be counted towards the mandatory contribution. Both companies already spend close to 1% of their revenue on insurance for delivery partners. If this amount is included, the financial impact may soften. 

Broader Economic Benefits

The new laws represent India’s first formal legal framework for gig and platform work. By expanding social security coverage and pushing more workers into the formal economy, the reforms may support long-term economic growth and strengthen labour protections.

Read more: New Labour Codes May Push Real Estate Labour Costs Up by 8–12% and Delay Project Timelines.

Conclusion

The new labour codes introduce short-term challenges for Eternal and Swiggy, mainly in the form of higher costs and temporary margin pressure. However, the long-term business outlook remains healthy. As the industry adapts and pricing resets, investors may see stability return once the final rules are fully implemented.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.