The real risk to India’s gig economy isn’t platforms. It’s policy

Across cities big and small, gig work is a pathway to economic mobility, supplemental income and a flexible livelihood.

By Rameesh Kailasam

India’s platform economy is facing a policy test that will shape its future. The question is no longer whether platform-based gig workers deserve social security, it's whether regulation will support the platform economy’s growth or choke its capacity to generate widespread economic inclusion.

The Centre’s Code on Social Security (“CoSS”), passed in 2020, was a landmark move. It marked the first step towards introducing social protections tailored for gig and platform workers. Countries worldwide looked at India’s CoSS as a pioneering framework, one that successfully balances innovation with welfare.

Yet, several states in India have taken advantage of Labour being a Concurrent subject under India’s Constitution. Rather than waiting for the Central Government to implement a unified social security mechanism for gig workers across India, states have bulldozed through the realities of the gig ecosystem by introducing standalone legislations.  From Rajasthan to Karnataka, states are proposing laws that not only duplicate the Centre’s efforts but overreach by imposing traditional employment structures on a system designed to operate differently.

This threatens to derail a sector that has become central to India’s economic and digital story. For millions, across cities big and small, gig work is a pathway to economic mobility, supplemental income and a flexible livelihood. India risks turning a globally admired framework into a cautionary tale of fragmented policymaking and self-inflicted damage. This is the time it learns from global examples of platform economies that faltered under overregulation.

Intent versus impact 

The intent — ensuring protection and social security for gig workers — is one that both the Government and the industry share. The challenge lies not in the intent, but in how it is being implemented.

State level action has reflected a deep misunderstanding of the platform economy. At first glance, the states’ efforts seemed aimed at gaining a first-mover’s advantage. By not adhering to the Centre’s precedent on this issue, the states appeared to be driven by a short-term push for public approval. Coupled with a narrative that platforms are the villains, further pushed this agenda. However, as the draft legislations started rolling in, they revealed something more concerning than duplication: many state legislations are attempting to overstep the boundaries of CoSS.

States like Rajasthan, Karnataka, Telangana and Jharkhand have introduced legislations that go beyond social security and welfare provisions. There has been little to no effort to consult every stakeholder and design a policy grounded in context. The result is a set of cookie-cutter policies shaped by a traditional lens, ignoring the nuances and on-ground realities of platform-based gig work. 

Under the garb of championing worker welfare, the draft legislations have attempted an overreach that risks blatant overregulation and are misaligned with the realities of the sector.

Recent drafts by states have introduced provisions relating to contracts, working conditions and remuneration that blur the legal boundaries between platform-based gig work and traditional employment.

What is even more concerning is that some of these drafts introduce language that directly contradicts CoSS. It is imperative to note here that the language changes in question, are in unequivocal violation of Article 254 of the Constitution of India — which specifies the Doctrine of Repugnancy — wherein states cannot legislate on themes that have been passed by the Parliament of India and have received Presidential assent.

The result will be catastrophic. The gig worker, for whom the bell tolls, will be the primary victim here. Gig workers will face parallel systems at the central and state levels, with unclear entitlements and complex compliance burdens for platforms. The danger is not just duplication, but contradiction and the Government overstepping into areas it hasn’t made an effort to understand.

Other aspects that will add to the damage are — on-ground regulatory confusion, duplicity of resource usage and a complete disruption to ease of doing business. For a sector as nascent as the platform economy, this will mark the beginning of the end.

The road to overregulation is paved with good intentions

India’s platform economy is still young, dynamic and finding its footing. What it needs is regulatory support that enables innovation, not regulation which stifles its development.

Overregulation in the platform-based gig economy has been tried — and it has failed.

Spain’s 2021 Riders Law and Italy’s regulatory actions followed a similar pattern. In Spain, strict classification and wage mandates led Deliveroo to exit and Glovo to scale back, leaving many couriers without work. In Italy, a series of court rulings and regulatory moves pushed to classify food delivery riders as employees with access to minimum wage, insurance and other protections. While the goal in both countries was to curb precarious work, the outcomes were mixed. Platforms responded by scaling back operations, automating dispatch and tightening schedules. Riders faced fewer opportunities, less flexibility and a loss of the autonomy that had originally defined platform-based gig work.

Singapore, however, took a different approach. Its legislation came only after a stakeholder-driven process and detailed study of India’s CoSS. The result was a more balanced law, preserving platform flexibility while introducing social protections. Today, Singapore is held up as a benchmark for responsible regulation of the platform economy.

Even when driven by good intentions, global experience shows that poorly designed rules often backfire, leading to outcomes that hurt, more than help.

Flexibility, ease of entry and short-term fallback options are core features of platform-based gig work. Undermining these features by introducing misplaced control can unintentionally harm the very stakeholders the Government is aiming to protect, including gig workers, consumers, and small businesses.  

India needs its own playbook 

Unlike its counterparts in the West, India’s platform economy has grown rapidly, shaped by local needs, widespread participation and inclusivity. According to the V. V. Giri National Labour Institute, gig work now accounts for 56 percent of new job creation. By 2030, gig workers are expected to make up 6.67 percent of India’s non-agricultural workforce.

Long before any mandates, and contrary to popular belief, Indian platforms began rolling out social protection and welfare measures voluntarily. These included accidental insurance, health benefits, financial literacy programmes, period leaves and grievance redressal frameworks. Many were custom-built for a fast-paced, high-churn ecosystem.

But instead of building on this foundation, fragmented state laws now risk undoing it. They make it harder for platforms to continue these efforts in a unified way. Worse, they threaten to slow down innovation and scalability.

The V. V. Giri study warns that if regulatory shocks persist, livelihood generation could drop to just 3.25 crore jobs by 2047 — far below the aspirational 9.08 crore. That means nearly 5 crore livelihoods are at risk, not because of market failure, but because of poor regulation.

India stands at a critical juncture. The choices policymakers make now will determine the future of platform-based gig work and the broader digital economy.

States should not treat platform regulation as a proxy for worker welfare. Creating conflicting laws will not build better protections, but rather create friction, confusion and lost opportunity. The Centre must take the lead in framing a unified, flexible policy that supports innovation while safeguarding workers.

Recognizing its deliverables under the vision of Viksit Bharat 2047, the platform economy has already supported millions. It can support millions more — if given the freedom to grow with the right guardrails in place. The question is — why would anyone want this growth to slow down?

(The author is President & CEO, IndiaTech.org.)

Views are personal and do not represent the stand of this publication.