Inside Swiggy’s battle to become an Indian-owned company and why Eternal had it easier

Food delivery and quick commerce major Swiggy has hit a roadblock in its attempt to become an Indian Owned and Controlled Company (IOCC), after shareholders rejected a proposal to amend its Articles of Association (AoA), a move central to its governance restructuring plans.

The special resolution secured only 72.36% shareholder approval, falling short of the mandatory 75% threshold required for such amendments.

The setback comes at a crucial time for Swiggy as the quick commerce battle intensifies and rivals sharpen their operational models. The Bengaluru-based company has been working to qualify as an IOCC under India’s foreign exchange regulations, a status that could potentially unlock greater flexibility in running inventory-led operations for its quick commerce arm, Instamart.

Under FEMA rules, a company qualifies as an IOCC only if both ownership and effective control rest with Indian residents or Indian-owned entities. Beyond shareholding, regulators also examine governance rights, board composition and investor veto powers.

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But unlike rival Eternal, whose restructuring was largely framed around preserving Indian ownership thresholds and supporting Blinkit’s inventory ambitions, Swiggy’s proposal became intertwined with a wider governance overhaul. That distinction appears to have unsettled investors, according to Industry experts.

Industry observers say shareholders may have viewed the governance changes as more than a routine regulatory restructuring. Several institutional investors had reportedly sought clarity from the company regarding the rationale behind the proposed amendments before the vote.

The contrast with Eternal is becoming increasingly significant in India’s quick commerce landscape.

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Eternal’s IOCC transition had enabled Blinkit to move towards an inventory-led model, allowing deeper control over procurement, warehousing and supply chains. Such structures can improve margins, enable private-label expansion and provide tighter operational control — all critical in the capital-intensive quick commerce business.

The urgency is understandable. While Swiggy reported a 44.7% year-on-year rise in Q4 FY26 revenue to Rs 6,383 crore and narrowed losses, the company continues to face profitability pressures in quick commerce. Instamart’s adjusted EBITDA losses widened even as growth remained strong and its Gross Order Value (GOV) slipped sequentially to Rs 7,881 crore in Q4 from Rs 7,938 crore in the previous quarter. 

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The failed vote also highlights a broader shift underway in India’s start-up ecosystem. Venture-backed start-ups that once prioritised aggressive growth are now being forced to revisit governance structures as public market investors demand greater accountability and regulatory clarity.

For Swiggy, the rejection may not necessarily end its IOCC ambitions, but it signals that the path ahead could require more shareholder alignment and a less contentious governance framework. The company has said it will continue engaging with shareholders as it works towards becoming an IOCC.