The Indian state of Rajasthan has adopted a bill to levy a tax on online purchases made through platforms like Amazon (AMZN.O), Ola (OLAE.NS), and Zomato (ZOMT.NS) to support welfare benefits for gig workers, the country’s first such scheme.

The number of gig workers in India has risen significantly to an estimated 15 million, becoming a target for political parties ahead of elections in five states in the coming months and general elections early next year.

According to state officials, the Rajasthan state assembly approved the platform-based gig workers’ welfare bill late on Monday, under which online platforms would collect a surcharge of up to 2% on transactions and deposit the proceeds in a welfare fund to be managed by a board comprised of workers, industry, and government representatives.

“With this Act, the interests of gig workers will be protected,” state chief minister Ashok Gehlot said in a statement, saying that despite making significant contributions to the economy, gig workers were not covered by present labor rules.

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ImageCredit: indiatoday

According to officials, the law will benefit over 400,000 gig workers in the state and includes a provision to establish a tribunal with certain judicial powers to address gig workers’ issues against their aggregator platforms.

Gig workers applauded the Rajasthan bill, declaring it a triumph for millions of workers’ rights.

According to Sheik Salauddin, national general secretary of the Indian Federation of App-based Transport Workers (IFAT), which fought for the surcharge, this historic step will provide a legal guarantee of social protection to gig workers.

Nationally, Prime Minister Narendra Modi’s administration received parliament’s consent in 2020 to alter labor regulations, including a new Social Security Code that proposed a social security system for gig workers funded by aggregator contributions.

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However, implementation has been delayed due to opposition from some businesses and labor groups. Gig workers have since begun lobbying opposition parties.

Karnataka, the southern state run by the opposition Congress party, promised free insurance coverage for gig workers earlier this month.

Gig worker organizations have urged the federal government to establish national minimum wages, define work hours, and provide social security benefits.

“We hope that before the elections, the Modi government will take steps to introduce benefits for gig workers,” Salauddin added.