Quick Commerce: Making Sense of the Rapid Development and New Legal Framework

Written by Kapuganti Bharath, the author is a law student currently pursuing BA.LLB from Symbiosis Law School, Pune

The Indian quick commerce is a fast-growing industry that has reached 64,000 crore ($7.47 billion) in FY25 and is expected to grow three times in FY28. As organizations in the Indian quick commerce sector continue to develop growth strategies using regulatory arbitrage to take advantage of foreign direct investment regulation, labor economics and operations, the authorities have been increasingly providing regulatory enforcement. The current level of regulatory convergence means that companies in the quick commerce sector will have to move away from using regulatory arbitrage for their business models and develop compliant and sustainable (environmentally and socially) business models in order to sustain their growth, which will challenge the foundations upon which they are built.

On the basis of market data, regulatory information and enforcement trends, we demonstrate how quick commerce platforms will at a turning point, where they must either take advantage of the ways that regulatory frameworks are still changing, with the potential for litigation and other negative outcomes; or they must develop into a more compliant business model, which will change both their revenue and service offerings for customers. Based on analyzing the e-commerce industry, the ability to ultimately achieve profitability is dependent on these two main elements: first, a move away from aggressive pricing schemes that were heavily subsidized by venture capital; and second, to recognize the importance of paying direct labor costs to employees and maintaining high level of quality in all areas of their businesses.

INTRODUCTION: EXPLOSIVE GROWTH TO REGULATORY MATURITY.

There has been a phenomenal growth in the Indian quick commerce market with the market projected to reach about 64,000 crore gross order value (GOV) by FY25 with a compound annual growth rate of 142% in FY22-FY25. This growth rate will place the industry almost three times to GOV amounting to about 2 lakh crore ($23.3 billion) by FY28.

1. Competitive dynamics and market structure.

   
   

By Q4 of FY25 the Blinkit will have approximately 45-50% market share with a GOV of 9,421 crore (134% year-on-year growth). Swiggy Instamart has up to 27% market share and Zepto has nearly 21% market share, such market concentration depicts the presence of high competition in terms of aggressive build-up of dark store networks. Dark stores increased more than 70 percent to 3,072 in FY25 and platforms have a goal of expanding to achieve delivery time requirements. The expansion of dark stores will create significant barriers for smaller and newer entrants to compete effectively as the shift of dark store networks becoming differentiated through speed and convenience provides larger companies with competitive advantages, due to the high initial costs of investing in the required systems (both infrastructure and operation) for smaller players. In this scenario, as the dark store networks are becoming the dominant model, there is a high potential towards oligopolistic competition within the industry, which will reduce the potential for new entrants or meaningful entry into the market. 

II. FOREIGN DIRECT INVESTMENT COMPLIANCE: INVENTORY OWNERSHIP CONUNDRUM.

In India, the Foreign Direct Investment (FDI) policy has a strict separation between market place models (100% FDI allowed) and inventory based models (foreign investment not allowed). Press Note 2/2018 directly outlaws the use of marketplace platforms to exert ownership or control of inventory, and limits the contribution made by a single vendor of over 25 percent of platform sales. Ownership of inventory directly impacts the flow of information/data between a company and its suppliers/consumers and will influence the company's responsibility regarding the integrity throughout its supply chain. Each platform's strategy for complying with this policy will heavily influence their respective operational model/strategies.

III. THE IOCC RESTRUCTURING AT BLINKIT.

The period between April and October 2025 will be marked by a huge corporation restructuring of Blinkit to become an Indian Owned and Controlled Company (IOCC), with foreign equity limited to 49.5. Blinkit had sent formal notice to sellers on July 12, 2025 informing them it was going direct to inventory ownership using its subsidiary, Blink Commerce Private Limited (BCPL), and that it will take effect on August 31, 2025 with the inventory transfer to BCPL’s books. Such restructuring is a regulatory compliance as well as risk recognition. By making the ownership of inventory very obvious instead of having the preferred-seller structure, Blinkit is anticipating regulatory issues in the future. 

IV. KARNATAKA GIG WORKERS ACT LABOR ECONOMICS.

1. Legislative framework

The Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, which will take effect on September 12, 2025 (with retroactive effect to May 30, 2025), is the first state-wide intervention in platform labor economics. The Act creates a two-level system, which has a direct influence on the economics of quick commerce units.

1. The welfare fee structure

The Platforms shall pay 1-5% of total payouts to the gig workers to the Karnataka Gig Workers Social Security and Welfare Fund. The welfare fee is not a recoverable logistics margin tax like the Goods and Service Tax (GST) input credits. According to the Act, such fee will be regarded as part of the overall contribution that has to be paid by Section 114(4) of the Code on Social Security, 2020, and will be reconciled periodically. This requirement will directly result in an increase in operating costs for quick commerce Platforms, which will impact the unit economics and require adjustments to either price, service design, or margins to remain profitable.

V. COMPETITION LAW DEVELOPMENT: THE 2025 COST RULES.

1. Regulatory background

Competition Commission of India (CCI) has historically experienced a challenge in prosecuting digital platforms because digital markets have ambiguity in establishing cost structures. This shifted to May 2025 when Competition Commission of India (Determination of Cost of Production) Regulations 2025 was introduced to supersede the erstwhile 2009 regulatory framework.

2. The new standards

The 2025 regulations create industry-neutral standards in a form of the Average Variable Cost (AVC) minus the total variable costs over total output. More importantly, these policies eradicate market positioning strategy as an excuse of long-term below-cost pricing. In the past, platforms defended their losses as the cost of customer acquisition or entering the market; the 2025 model has to follow the benchmarks of production costs strictly.

The regulations give the CCI the authority to seek the help of independent experts in determining the cost structure so that it does not have to rely on data provided by the company, in the case of companies functioning under negative contribution margins this could possibly lead to an increase of the cases of predatory pricing under Section 4(2)(a)(ii) of the Competition Act.

VI. AICPDF COMPLAINT AND MARKET IMPACT.

In late 2024 The All India Consumer Products Distributors Federation (AICPDF) came up with a detailed complaint to the CCI citing deep discounting and predatory pricing. The complaint also has the price comparison information of 25 products where there are significant variances between online and offline retail prices. AICPDF asserts that about 200,000 kirana stores have already been shut down the year before because of the rivalry presented by quick commerce, they highlight the huge market disruption caused by the ferocious quick commerce growth. This debate highlights that when a new industry creates a marketplace, understanding its potential effects must also assess beyond short-term impacts to Consumers and Incumbents. A fundamental understanding that rapid disruption will alter not only market structures and Consumer expectations, but will also disrupt existing Supply Chain networks. However, while these shifts may improve efficiency and provide Consumers with more access to Goods and Services, traditional retail networks (and/or Supply Chain networks) may lose their relevance, and job stability will be at risk if the regulatory structures do not keep pace. Therefore, any assessment or analysis of the changes caused by Quick Commerce must consider not only the impacts that can be measured, but also the shifts caused by Quick Commerce on Industry Practices and Stakeholder Relationships over time.

1. Abiding by the food safety and environmental standards.

The stern enforcement of the Food Safety and Standards Authority of India (FSSAI) and the state Food and Drug Administration’s took place in the middle of 2025, with raids and license suspension happening because of hygiene non-compliance inside the structural framework.

2. June 2025 enforcement actions:

Zepto (Dharavi, Mumbai): License was suspended, after inspection by the inspectors revealed fungal contamination of food items, storage in stagnant water, cold storage not within stipulated temperature, and mixing of spoilt products with fresh ones.

Blinkit (Balewadi, Pune): The Company has been suspended on licenses because it operates without being sanctioned by FSSAI, food products are stored on dusty flooring, no pest control certifications or registered workers.

Suspension of licenses disrupts micro-markets' ability to meet customer orders. Due to the marginal economics associated with a unit of production, each time a facility is suspended it creates two effects; first, it eliminates the potential order volume from the facility, and second, it increases the cost of sales associated with acquiring new customers.

3. Post-raid requirements (July 2025)

FSSAI also introduced detailed additional standards such as invoice disclosure (the FSSAI license numbers to be printed on all consumer invoices), and store-level identification (platforms were also required to keep staff certification logs, cold-chain calibration logs, and pest-control audit logs per dark store). They may make the dark stores more of an ongoing regulatory burden rather than a quick fulfillment center as per the requirements.

4. Plastic waste management regulations (June 2025).

The Plastic Waste Management (Amendment) Rules, 2025 released by the Ministry of Environment, Forest and Climate Change required traceability of plastic packaging by use of QR codes or barcodes, a minimum of 30 percent of recycled plastic in rigid packaging and regular compliance reporting to the Central Pollution Control Board (CPCB).

VII. STRATEGIC RECOMMENDATIONS TO OVERCOME THE OPERATIONAL PREDICAMENTS

1.  Operation excellence and labor relations.

On top of the legal adherence to the fee of welfare of gig workers, platforms ought to invest in the stability of the workforce by offering training opportunities, equipping them with safety supplies, and visibility regarding the work with algorithms. Satisfied and loyal delivery partners lower the turnover expenditure and enhance the quality of service which could offset the high labor expenses.

2. Operation compliance systems.

The platforms will need to have centralized systems to monitor compliance whereby FSSAI license monitoring, cold-chain monitoring, pest control certifications, and packaging materials monitoring are incorporated. Continuous monitoring means that any problem is identified in time and before the regulatory inspection, the risk of the license suspension is minimized. In addition to decreasing potential operational disruptions resulting from non-compliance with regulatory requirements, proactive compliance management helps the platform to obtain and preserve order volume and customer confidence over the long term, as well as eliminate the expensive consequences resulting from penalties associated with regulatory non-compliance or interruptions of service.

VIII. CONCLUSION: THE WAY TOWARDS REGULATORY MATURITY.

India's fast commerce industry and the rapid growth of this sector are changing dramatically, especially since the government's introduction of regulations regarding FDI compliance for foreign companies, worker welfare for gig workers, enforcement of competition laws, food safety, environmental standards etc. in 2025. As a result of the new regulatory environment, quick commerce businesses have required reorientation of their business models in order to be in compliance with laws governing their operations while promoting sustainable growth while also protecting various stakeholder interests. Additionally, these regulations are redefining the norms of the industry and requiring quick commerce businesses to balance their immediate growth potential with future sustainability and their obligation to be socially responsible.

The long-term market leaders will become those platforms that will manage to incorporate regulatory compliance in their operational DNA and regard regulations as a source of sustainable competitive advantage, rather than as the limitation to it. Those that have been pursuing speed and market share at the expense of compliance and unit economics have high regulatory, financial, and operational risks.

The e-commerce boom in India illustrates a more general trend that has seen digital platforms in emerging economies becoming increasingly regulated. This represents a change from reliance upon subsidies and disruptive growth to a business model that operates legally, generates profits over the long term, and is accountable for how it operates in the marketplace. As we move forward, digital platforms operating within such markets may be successful by embedding regulatory considerations into their business plans and providing both legal and market leadership in a challenging and evolving environment.