Profits Over Protections Understanding the Business of India’s Gig Economy

Abstract

This paper examines the rapid expansion of India’s Gig Economy and the complex socioeconomic vulnerabilities faced by its workforce. Using official datasets, academic papers, industry surveys and secondary literature. The study analyses the structural characteristics of the platform-based labor markets, including income volatility, algorithmic control and the absence of enforceable traditional labor protections. A central contribution of this paper is a quantitative assessment of the financial incentives that companies derive from not classifying gig workers as employees but instead as independent contractors. This classification allows them to bypass statutory obligations such as employee provident fund contributions, paid leaves, sponsored insurance, and minimum wage compliance. By doing this, the firms achieve labor cost savings of about 20-40% per worker. When these savings are compounded at a national scale, it creates a strong disincentive for firms to formalize employment relationships, reinforcing a cycle of precarity among millions of workers. This paper also further evaluates the limitations of India’s existing framework, particularly the Code on Social Security (2020), which recognizes gig workers but fails to provide enforceable legal guarantees. Through a combination of empirical evidence and policy analysis, the study proposes a multi-faceted regulatory approach, including the introduction of a “dependant contractor” category as well as platform-mandated social security contributions and the recognition of collective bargaining rights.