Fragmented Gig Worker Policies Pose Threat to India's Digital Platform Economy Growth

India's Gig Economy Faces Regulatory Uncertainty with Karnataka's State-Level Social Security Act

Key Highlights

• Karnataka's Platform-Based Gig Workers (Social Security and Welfare) Act, 2025 establishes a parallel state-level system for gig and platform workers, potentially undermining the national framework set forth in the Code on Social Security, 2020 (CoSS).
• The central framework recognizes gig and platform workers as a distinct category of labour, providing for registration on a national portal and empowering the Central Government to design social security schemes.
• Constitutional and Legal Validity: The Karnataka Act has not received Presidential assent, and its compliance with Article 254 of the Constitution of India is uncertain.
• Parallel Systems and Industry Concerns: The Act creates a state-level welfare fund, financed through a welfare fee imposed on aggregators, which may lead to fragmented compliance regimes and dual contributions for platforms operating nationally.
• Operational and Financial Uncertainty: The lack of a publicly notified mechanism for reconciliation between the State fund and the National Social Security Fund creates structural challenges for platforms operating across multiple states.

Background

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The Code on Social Security, 2020 (CoSS) marked an important step towards extending formal social protection to gig and platform workers. The central framework provides for registration on a national portal, empowers the Central Government to design social security schemes, and contemplates contributions from aggregators and other sources into a National Social Security Fund.

Concerns and Implications

• The Karnataka Act's creation of a parallel state-level system risks undermining the national framework and creating operational and financial uncertainty for platforms operating nationally.
• The lack of a publicly notified mechanism for reconciliation between the State fund and the National Social Security Fund may lead to dual contributions and fragmented compliance regimes.
• The digital infrastructure envisaged under the Karnataka Act has not yet been fully operationalized, creating uncertainty for both regulators and regulated entities.