App-Based Delivery Growing Rapidly in India

With India’s unemployment rate sitting at a reported 45-year high, hundreds of thousands of young Indians turn to technology to survive. With the growing gig economy in the region, even the world, driving for food delivery services are becoming more and more popular as a profession.

The unemployment rate in India in 2018 is at 6.10%, almost twice an increase from 3.52% during the previous year.  This is even projected to rise up to 13.84% in 2020, according to econometric models. With the impact of the lack of opportunities to earn an income, citizens in the country, mostly young men, turn to food-ordering apps for survival. A surge in the popularity of apps like Uber Eats and Swiggy increased the need for delivery workers, who are responsible for the delivery of food from restaurants and other food establishments to wherever customers demand the food to be delivered to- mostly in homes and offices.


Global Increase in Demand for Online Food Delivery

Millennials, those who were born between 1981 and 1996, are showing a growing appetite for online food delivery. They are often characterized as “time-starved” and “convenience-seeking,” often ditching the kitchen for fast food and restaurants, and now food delivery services. This includes millennials in India, who are reportedly the chief wage earners in the country that comprises 47% of the working age population. Millennials in the country have high levels of disposable income and are digitally-connected, so it comes as no surprise that app-based delivery continues to rise rapidly.


Labor Issues

Most delivery workers from these food-ordering apps are treated as independent contractors. This means that labor laws in the country do not apply to protect these individuals. Short-term contracts, issues with workers’ rights and conditions, and the long-term viability of food delivery continue to worry some. Despite the disadvantages, most food delivery workers find the job lucrative, especially to those who lack higher education. According to some, they earn more than twice as much as they used to in couriering. They reportedly earn as much as 18,000 rupees or about US$253 a month.

The app-based food delivery industry in the country is worth around US$7 billion, according to research.


Foreign Investments

Food delivery apps in the country are backed by international investors. Swiggy, a food delivery app in India that processes more than 300,000 a day, announced at the end of 2018 that it had received US$1 billion in funding from foreign investors like South Africa’s Naspers and China’s Tencent. The five-year-old company is now valued at more than US$3 billion.

Last year, Zomato, Swiggy’s rival for market dominance, has received US$210 million more from Alibaba’s Ant Financial.

Overall, India’s gig economy is expected to grow up to US$30 billion by 2025.


Imminent regulation

With the increasing popularity of services in the gig economy and a lack of regulation in the industry, the demand for more stringent laws to protect workers inevitably grows as well. Right now, “gig workers” have no specific laws to ensure the protection of their health and safety.  Engaging workers to do specific tasks related to a business establishment through third-party contractors is regulated by the Contract Labor (Regulation and Abolition) Act, 1970 or the CLRA Act. There is potential scope for companies of food-delivery apps or gig platforms, in general, to be construed in law as contractors which impose obligations to obtain licenses and comply with the requirements mandated by law.

Laws that protect workers in cases of accidents are also yet to be tested in its applicability to gig workers. One thing is for sure, regulation is imperative and it needs to be done as soon as possible.

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