Platform Economics in India: Promise, Power, and the Governance Challenge

By AM Jose Professor & Head, Amity School of Economics, Amity University Gurugram

Introduction: Every time an Indian pay through UPI, orders food online, or books a cab, they are not just using technology - they are participating in a new economic system shaped by digital platforms. India’s digital transformation is increasingly being driven by platforms - digital intermediaries that connect buyers and sellers, workers and customers, service providers and users. Whether it is paying through UPI, ordering food on Swiggy, booking a ride, or selling goods online, platforms now mediate a growing share of everyday economic activity. What began as a technological convenience has evolved into a structural shift in how markets operate, how work is organised, and how data is generated and controlled.

The scale of this transformation is significant. According to official estimates, India’s gig and platform workforce numbered about 7.7 million in 2020–21 and is projected to grow to over 23 million by the end of the decade (NITI Aayog). Platforms are no longer peripheral actors; they are becoming central institutions of the digital economy. This raises a critical policy question: how can India harness the benefits of platform-led growth while preventing new forms of inequality, informality, and concentration of power?

How platform economics work

At the core of platform economics is the idea of multi-sided markets. Unlike traditional firms that sell products directly to consumers, platforms create a shared digital space where different groups interact. An e-commerce platform connects buyers and sellers; a ride-hailing app links drivers and passengers. The platform itself does not merely facilitate transactions - it shapes them through rules, algorithms, and data-driven design.

A defining feature of platforms is the presence of network effects. As more users join a platform, its value to other users increases. More sellers attract more buyers; more buyers, in turn, draw additional sellers. Over time, this feedback loop can generate rapid growth and market dominance. Data intensifies this dynamic. Platforms collect vast amounts of information on user behaviour, transactions, and preferences, allowing them to refine algorithms, personalise services, and optimise pricing. The accumulation of data becomes a powerful competitive advantage - a “data moat” that makes entry difficult for rivals.

These characteristics challenge conventional economic assumptions. Market dominance in platform economies does not always translate into higher prices in the short run, as firms often prioritise scale and network expansion over immediate profits. As a result, traditional competition policy tools - designed for price-based monopolies - struggle to address platform power, which is often exercised through control over data, infrastructure, and access.

In India, platforms have delivered tangible gains. By sharply reducing transaction costs, they have expanded access to markets for consumers, producers, and small entrepreneurs. Digital payments through UPI have made instant, low-cost transactions routine even for small-value exchanges. Street vendors, gig workers, and micro-entrepreneurs can now accept cashless payments, verify identities digitally, and participate in the formal economy with relatively low entry barriers.

Platforms have also created new livelihood opportunities. Gig work - short-term, task-based employment mediated by apps - has absorbed millions of workers in ride-hailing, food delivery, logistics, and online services. For many young people, women, and residents of smaller towns, platform work has offered an entry point into income generation where formal employment options are limited.

Beyond labour markets, platforms have stimulated innovation across sectors such as fintech, agritech, and edtech. Farmers increasingly use digital platforms to access price information and markets; students in remote areas access quality educational content online. India’s emphasis on open digital infrastructure, most notably through the Open Network for Digital Commerce (ONDC), reflects an effort to shape platform growth through public policy. By promoting interoperability and open protocols, ONDC seeks to prevent monopolisation and enable small sellers and start-ups to compete in digital markets.

The risks: informality, insecurity, and power asymmetries

Yet platform-led growth has also exposed deep structural risks. For workers, gig employment is often characterised by income volatility, the absence of social security, and weak bargaining power. Classified as independent contractors, platform workers typically lack access to health insurance, pensions, paid leave, or accident coverage. Although India’s labour codes formally recognise gig and platform workers, implementation remains limited. In practice, risks are largely borne by workers themselves.

Algorithmic management further compounds insecurity. Platforms allocate tasks, set prices, and monitor performance through opaque digital systems. Workers often have little clarity on how decisions are made or how earnings fluctuate. Rating systems and the threat of deactivation create asymmetric power relations, while traditional mechanisms of collective bargaining are difficult to sustain in app-mediated work environments.

Beyond labour, platformisation raises concerns about exclusion and concentration. Despite rapid growth in internet use, digital access remains uneven. Large segments of the population - particularly in rural areas and among older or less educated groups - remain offline or lack the skills required to participate effectively in digital markets. As economic activity increasingly shifts online, these gaps risk reinforcing existing inequalities.

Market concentration is another concern. Network effects tend to produce “winner-takes-most” outcomes, with a small number of platforms dominating entire sectors. Control over data, self-preferencing practices, and high commission fees can disadvantage smaller sellers and service providers, while raising broader questions about competition, privacy, and accountability.

Governing the platform economy

These challenges underscore the central policy imperative: platforms must be governed, not merely allowed to expand. India has begun to respond on multiple fronts. Competition authorities are rethinking antitrust frameworks to address data-driven market power. The Digital Personal Data Protection Act marks an important step towards strengthening privacy and user rights. Labour policy debates increasingly focus on portable benefits and welfare funds for gig workers.

At the same time, governance extends beyond regulation. Investment in digital infrastructure, literacy, and affordable access remains essential to ensure inclusive participation. Public digital platforms such as Aadhaar and UPI function as foundational infrastructure on which private innovation can build, much like railways in an earlier era. The challenge is to ensure that this infrastructure serves public interest rather than entrenching private dominance.

The road ahead

India’s platform economy illustrates both the promise and the perils of digital transformation. Platforms have expanded access, reduced frictions, and enabled new forms of work and entrepreneurship. Yet without institutional safeguards, they risk deepening informality, concentrating power, and reproducing inequality in digital form.

The defining task ahead is not to slow technological change, but to shape it. Platformisation must be matched by institutional accountability - through competition policy, labour protections, data governance, and inclusive infrastructure. Only then can India’s digital economy evolve in a manner that is innovative, fair, and broadly shared.

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