How two-wheelers are fuelling growth of gig-economy in India?

Growing gig economy: The gig economy has emerged as a transformative force, reshaping traditional employment paradigms worldwide. Defined by its flexible, on-demand nature, this independent working model thrives on digital platforms that seamlessly connect service providers with consumers, a recent report by KPMG highlighted. 

The report also sheds light on how two-wheelers are fuelling the growth of the economy in India. According to the report, the growth of two-wheelers in FY99-2009 was at 8 per cent, which has gone up to 11 per cent in FY09-2019. 

“Over the last 5 years, India saw mobility aggregators launch their affordable products such as bike taxis across the nation. Enabled by new delivery-driven business models, two-wheeler sales in India witnessed faster growth in the decade ending FY19, compared to the previous decade (FY20-22 not included due to the impact of the pandemic),” the recent report by KPMG stated. 

Growth of Delivery Market

The report highlighted that on the delivery front, the online food and grocery delivery market grew at 34 per cent and 55 per cent CAGR, respectively, between 2017-2016. “On passenger mobility, bike taxis have shown tremendous promise. The industry started picking up from 2019 onwards, and grew 2.5-3 times between 2020 and 2022, signalling a promising future,” the report added further. 

In India, the gig economy has witnessed explosive growth, with an estimated 10 to 15 million gig workers spanning various sectors. This surge has been fuelled by the increasing reliance on digital platforms, which serve as the primary gateway for gig opportunities. Notably, two-wheelers have emerged as the backbone of India's gig economy, facilitating vital last-mile connectivity for services ranging from food and grocery delivery to transportation.

The role of digital platforms and aggregator companies cannot be overstated in this ecosystem. These entities have revolutionised the commercialisation of two-wheelers and introduced innovative services like bike taxis, reshaping the mobility arena.

The online food and grocery delivery sectors have experienced meteoric growth rates, underlining the profound impact of the gig economy on consumer behaviour and service delivery.

EV Boost

It's not only the two-wheeler growth the report talked about, it also threw light on how EVs are leading to the generation of more business models. “The rapid rise of end-use sectors provided a fillip to two-wheeler demand, particularly in the EV space (aided by government subsidies), giving rise to new business models (such as leasing and aggregation) where players are trying to plug the gap between demand-supply mismatch faced by the delivery platforms,” the report highlighted. 

As of 2023, there are an estimated 1.5 million to two million gig motor vehicle drivers in India associated with leading aggregator platforms. Motor vehicle-driven gig work primarily consists of those driving two-wheelers for commercial purposes in sectors across mobility, food delivery, e-commerce delivery, hyperlocal delivery and local courier delivery. Industry discussions suggest that the majority of these drivers are present across multiple platforms.

Enabling Smartphone Penetration

According to the report, the proliferation of smartphones and the rapid expansion of the digital economy have been instrumental in propelling this phenomenon, with digital GDP outpacing its traditional counterpart by a significant margin over the past decade.