The Karnataka cabinet has approved the Platform-Based Gig Workers (Social Security and Welfare) Bill, marking a major step towards ensuring social security and welfare for thousands of gig economy workers across the state. This bill, which had previously been put on hold due to internal differences, is now set to become law through an ordinance, as confirmed by Law and Parliamentary Affairs Minister HK Patil.

A Welfare Fund for Gig Workers

Under the provisions of the newly approved bill, aggregator platforms such as Amazon, Flipkart, Ola, Uber, and others operating in Karnataka will now be required to contribute a cess of 1% to 5% on each transaction. The funds collected will be pooled into a dedicated Gig Workers’ Welfare Fund aimed at supporting the social security needs of gig workers in the state.

This development comes after an important meeting in Delhi between Karnataka Chief Minister Siddaramaiah and Congress leader Rahul Gandhi, where the bill was reportedly discussed at length. The bill's passage also aligns with the Congress party's national focus on labour rights, especially within India’s rapidly expanding gig economy.

Ordinance on the Way

HK Patil, speaking at a press briefing, stated that the government would soon bring in an ordinance to implement the bill and begin the process of operationalizing the welfare fund. He emphasized that this was a much-needed move to protect the growing workforce in the gig sector.

While there was initial hesitation and disagreements within the cabinet, the state government eventually reached a consensus on the bill's structure, thanks in part to the push from national leadership.

Mixed Response: Applauded by Workers, Criticised by Industry

Gig workers and their unions have welcomed the bill, calling it a long-overdue step to address the lack of social security in their line of work. Many of these workers are often classified as independent contractors, which leaves them outside the purview of traditional labour laws, denying them benefits like insurance, paid leave, or pension schemes.

However, industry associations such as the Internet and Mobile Association of India (IAMAI) and NASSCOM have voiced serious concerns. They argue that imposing a cess of up to 5% could significantly disrupt aggregator business models, particularly for startups and digital-first platforms that operate on thin profit margins.

Both bodies have also warned that this bill could hurt Karnataka’s image as an investor-friendly and tech-driven state, especially since Bengaluru is home to India's largest cluster of startups and gig-dependent services.

Key Provisions of the Bill

The bill includes the following core components:

• 1–5% cess to be levied on the gross transaction value of services offered by platforms.

• Creation of a state-level welfare board to manage and oversee the Gig Workers’ Welfare Fund.

• Eligibility criteria and benefits framework for registered gig workers, which could include health insurance, accident coverage, disability benefits, and possibly retirement schemes.

• Mandatory registration of gig workers with the welfare board to avail of the benefits.

• Monitoring and enforcement mechanisms for ensuring platform compliance with the cess payment.

Why This Matters

Karnataka is the first Indian state to move forward with a dedicated gig workers’ welfare legislation, potentially setting a template for other states to follow. With an estimated over 7.5 million gig workers in India, of which a significant number reside in Karnataka, this move has far-reaching implications for the future of the gig economy in the country.

The bill marks a shift in legislative focus from traditional employment categories to emerging informal labour sectors, particularly those powered by digital platforms and mobile technology.

The Broader Context: India's Gig Economy in Focus

India’s gig economy is expanding rapidly, driven by demand for flexible work models, digital platforms, and consumer convenience. According to reports, by 2030, India is expected to have over 23.5 million gig workers, contributing approximately 1.25% of GDP.

Yet, despite their growing role in the economy, gig workers face precarious work conditions, lack of safety nets, and no legal protections. The Karnataka bill is seen as a corrective measure to address these gaps.

Challenges Ahead for Implementation

Despite its noble intentions, implementation of the bill may pose several challenges:

• Determining the accurate transaction value on which the cess will be applied.

• Ensuring transparent collection and utilization of the welfare fund.

• Preventing platforms from passing the cost onto consumers or workers, which could defeat the bill’s core purpose.

• Managing disputes between platforms and regulatory authorities over compliance and interpretations.

Furthermore, there are concerns over the efficiency of the welfare board, which is expected to handle large volumes of registrations, claims, and disbursements.

Industry Reaction: A Tightrope Walk

The bill has placed the Karnataka government in a delicate position — balancing the interests of workers with those of businesses and investors. Given Bengaluru’s reputation as the startup capital of India, it is essential that the government engages with stakeholders to ensure smooth rollout without triggering an exodus of companies from the state.

Startups are particularly sensitive to policy unpredictability, and several firms have already begun exploring options to shift their operations or incorporate in other states with more favorable regulations.

Political Will vs. Economic Realities

The backing of top Congress leaders for the bill signifies a clear political message — labour rights will be central to the party’s governance model. However, economic pragmatism must also guide the implementation to avoid unintended disruptions.

It remains to be seen how Karnataka will balance progressive labour policy with sustained economic growth, especially in sectors as dynamic as tech, mobility, e-commerce, and logistics.

Conclusion

The Karnataka Gig Workers Welfare Bill is a landmark initiative that recognizes and addresses the vulnerabilities of a rapidly growing segment of the workforce. By legislating platform accountability and creating a state-supported welfare infrastructure, the bill seeks to redefine worker rights in the digital era.

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