Team siliconindia

• India's food delivery market is expected to grow over 20% in the next 2-4 quarters.
• Growth is driven by festive season demand and recent GST changes that boost disposable income.
• Zomato and Swiggy may face increased costs due to new tax rules but are passing on the burden to customers.

India’s food delivery sector is expected to bounce back strongly, with growth projected to surpass 20% over the next two to four quarters. After a period of slowing momentum, the industry is now being fueled by rising festive season demand and recent Goods and Services Tax (GST) reforms that leave more money in consumers' hands.

Previously, the sector had been expanding at a pace of around 17-18%, with growth moderating in recent quarters. Gross Order Value (GOV) for top platforms like Zomato and Swiggy declined slightly, from 19-20% in FY24 to about 18% in FY25. However, projections for FY26-FY27 have now been revised upwards, estimating 21-23% growth.

To meet the rise in demand and balance increasing costs, both Zomato and Swiggy have raised their platform fees ahead of the festive season. Swiggy increased its fee from Rs 14 to Rs 15, while Zomato moved from Rs 10 to Rs 12. These price adjustments aim to protect margins amid rising operational expenses.

Also Read: Cream Stone Welcomes GST Cut, Sees Boost for Ice Cream Industry

However, new tax regulations could weigh on the bottom line. Following a clarification from the GST Council, online food delivery platforms must now pay an 18% GST on behalf of their delivery partners, who were previously exempt. This change could lead to an additional yearly cost of Rs 180-200 crore for each platform.

Executives have confirmed that these added costs will likely be passed on to customers, which could lead to slightly higher delivery charges going forward. Despite the cost pressures, the sector remains optimistic, expecting strong order volumes and improved customer spending to drive future growth.