AI, Quick commerce and smaller cities power Swiggy’s next growth phase

Food delivery major Swiggy is sharpening its focus on the Indian market, betting on low digital penetration, technology-led efficiencies and a rapidly evolving employment model to sustain growth, even as competition intensifies and regulatory scrutiny rises.

Speaking on the sidelines of the World Economic Forum Annual Meeting, Swiggy’s Food Marketplace CEO Rohit Kapoor said the company has barely tapped the country’s food delivery potential, with an estimated 85-90 per cent of the addressable market still untouched. With such headroom at home, Swiggy has no immediate plans to expand overseas.

India’s online food delivery penetration remains modest at around 10-12 per cent, industry estimates suggest far below levels seen in Western economies and several Asian peers. Kapoor said this gap underlines a long runway for expansion, especially as a new consumer class enters the digital economy and ordering habits deepen beyond major metros.

Swiggy currently operates in a tightly contested duopoly. Industry data indicates the company holds roughly 42-44 per cent share of India’s online food delivery market, trailing rival Zomato but remaining a strong second player. Kapoor said the focus is less on short-term share shifts and more on expanding the overall market, which would benefit all participants.

Against this backdrop, Swiggy continues to guide for 18-20 per cent year-on-year growth in its food delivery business. Several factors are driving this trajectory. Tier-II and Tier-III cities are emerging as key growth engines, as rising disposable incomes and improving logistics infrastructure fuel adoption outside large urban centres. Subscription offerings such as Swiggy One are also boosting order frequency and customer loyalty, while cross-usage between food delivery and quick commerce platforms is lifting overall engagement.

The company’s quick commerce arm, Instamart, along with faster food delivery formats, has helped broaden Swiggy’s presence in everyday consumption, even as the segment remains capital intensive. Management sees these adjacent businesses as complementary rather than standalone profit centres, strengthening customer retention across the ecosystem.

Technology sits at the core of Swiggy’s operating model. Kapoor said generative AI is already deeply embedded across the company, enabling real-time analysis of customer service interactions, sharper decision-making for leadership, and actionable insights for restaurant partners and delivery workers. AI tools help restaurants track menu performance, guide delivery partners towards high-demand locations, and allow management to monitor business performance on a near real-time basis what Kapoor described as the “democratisation of intelligence”.

Robotics is also being deployed selectively, particularly in warehouses, though Kapoor cautioned that emerging technologies such as drones remain experimental in food delivery. While drone logistics may work for fixed drop points, last-mile delivery to individual homes or offices remains a challenge, and widespread adoption will depend on cost reductions and clear efficiency gains over existing models.

On profitability, Swiggy has made gradual progress in improving unit economics, particularly in its core food delivery business. Higher advertising revenues from restaurant partners, better batching of orders, and tighter control over delivery costs have helped narrow losses. However, sustained profitability across the group remains a work in progress, with competition-driven discounts, rising rider costs and investments in quick commerce continuing to weigh on margins.

A central pillar of Swiggy’s strategy is its large delivery partner base, which Kapoor described as a “third pillar” of India’s job market. He argued that delivery work should be viewed as flexible employment rather than conventional gig work, sitting alongside formal salaried jobs and entrepreneurship as a distinct livelihood option. Nearly 2.5 million people worked on the Swiggy platform at some point last year, highlighting the scale of this workforce.

Kapoor stressed that the delivery partner ecosystem is diverse, comprising students, short-term earners, people seeking supplementary income and those who choose platform work as a longer-term occupation. He welcomed the government’s social security code as a positive step, but cautioned that applying traditional employment rules to flexible work could stifle growth and reduce opportunities.

Regulatory challenges remain an important consideration for the sector. Food delivery and quick commerce platforms face increasing scrutiny around worker welfare, pricing practices, safety norms and marketing claims, particularly in ultra-fast delivery. Kapoor said thoughtful regulation that recognises the distinct nature of platform-based work will be crucial to sustaining innovation and employment growth.

Looking ahead, Swiggy’s expansion strategy remains firmly India-centric. The company is prioritising deeper penetration in under-served cities, expanding its subscription base, improving restaurant monetisation tools, and strengthening linkages between food delivery and adjacent services. With food delivery adoption still in its early stages, management believes the biggest growth opportunity lies not in chasing global markets, but in building scale, efficiency and trust across India’s vast and diverse consumer base.