Bengaluru: The Internet and Mobile Association of India has urged the Government of Karnataka to defer the implementation of the proposed gig worker welfare fee on ecommerce operators until operational issues are resolved and welfare schemes are formally notified.

The association has raised concerns that the levy, introduced under the Karnataka Platform-based Gig Workers (Social Security and Welfare) Act 2025, could lead to duplication of financial obligations for digital platforms if implemented without aligning with existing central regulations.

Welfare fee under new state law

The Karnataka legislation mandates that ecommerce and platform-based companies contribute 1 per cent of their commission towards a welfare fund for gig workers. The state government has also capped the levy depending on the business model of the platform.

According to the notified structure, the fee is capped at 50 paise, 75 paise and ₹1 per transaction, a measure aimed at reducing the financial burden on smaller companies.

Officials estimate that the initiative could mobilise between ₹250 crore and ₹300 crore annually for the welfare of gig workers.

The fund is intended to support social security schemes, welfare programmes and benefits for workers engaged in app-based services across the state.

IAMAI flags overlap with central law

In its communication to the state government, IAMAI pointed out that the Code on Social Security 2020 already requires digital platforms to contribute towards the social security of gig workers.

Under the central law, aggregators are required to contribute between 1 per cent and 2 per cent of their annual turnover to support gig worker welfare programmes.

At the same time, the Karnataka law requires a welfare fee ranging between 1 per cent and 5 per cent of payouts made by aggregators to platform workers.

The association said that without clear rules on reconciling these two frameworks, companies could face overlapping financial obligations at both the state and central levels.

Request for clarity on reconciliation mechanism

The industry body has asked the state government to temporarily keep the collection of the welfare fee in abeyance until both governments establish a mechanism to offset or reconcile contributions made under the two laws.

While the Karnataka legislation states that welfare payments under the state act would be considered as fulfilling obligations under the central code, IAMAI noted that there are no clear guidelines explaining how such adjustments would work in practice.

In the absence of such rules, aggregators may effectively be required to contribute twice, which could increase operational costs for digital platforms.

The association emphasised that a formal framework should be created to harmonise contributions between the state and central systems before implementation begins.

Welfare schemes yet to be notified

IAMAI also highlighted that the state government has not yet notified specific welfare schemes under the Karnataka gig worker law.

According to the association, many digital platforms already provide insurance coverage and other benefits to gig workers, often paying the entire premium on behalf of the workers.

Introducing mandatory financial contributions before government welfare programmes are finalised could lead to duplication of expenses and may compel companies to discontinue some of their existing support initiatives.

Such a scenario could potentially create gaps in social protection for gig workers, the association warned.

The body suggested that contributions should begin only after the welfare programmes are formally designed and implemented.

Gig workforce in Karnataka

Karnataka is among the first states in India to formulate a dedicated policy framework for gig and platform workers.

The initiative has been supported by the state leadership including Siddaramaiah, D K Shivakumar, and Priyank Kharge.

The welfare fund created under the law will be managed by a 16-member Gig Workers Welfare Board headed by Labour Minister Santosh Lad.

According to official estimates, Bengaluru alone has around 2.75 lakh gig workers engaged in services such as ride-hailing, ecommerce delivery and food delivery.

Across the state, nearly 5 lakh gig workers are associated with platform-based services and are expected to benefit from the proposed legislation.

Major companies affected

Karnataka hosts several major digital platforms that rely heavily on gig workers for their operations. These include companies such as Amazon, Zomato, Uber, Ola, Meesho, Porter and Blinkit.

These companies employ thousands of delivery personnel, drivers and logistics workers who fall under the category of gig workers.

Conclusion

The Karnataka government’s proposed welfare fee represents a significant step toward expanding social security for gig workers. However, industry stakeholders are seeking clarity on how the state framework will align with existing central regulations.

IAMAI has urged authorities to delay the implementation of the levy until clear guidelines are issued on reconciling contributions and until welfare schemes are formally rolled out. The outcome of these discussions could shape how gig economy regulations evolve not only in Karnataka but also across India.