ONDC: Transforming India’s Digital Commerce

Digital Commerce Reimagined for Inclusivity and Innovation

Date: January 4, 2025
Presented by: Ministry of Commerce & Industry

“ONDC has contributed to empowering small businesses and revolutionizing e-commerce, thus playing a vital role in furthering growth and prosperity.”
— Prime Minister Narendra Modi

Introduction

The Open Network for Digital Commerce (ONDC) is a transformative initiative by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, Government of India. Launched in April 2022, ONDC is redefining the digital commerce landscape by introducing an open, inclusive, and interoperable network.

ONDC is designed to create a level playing field for sellers, buyers, and service providers across India, particularly focusing on Micro, Small, and Medium Enterprises (MSMEs). The initiative eliminates dependency on monopolistic platforms, fosters innovation, and empowers small businesses by standardizing processes and opening new opportunities in the e-commerce sector.

What is ONDC?

ONDC operates as an open-source network, encouraging the exchange of goods and services over digital platforms through open standards and protocols. Unlike traditional e-commerce platforms, ONDC functions as a decentralized enabler rather than an intermediary, promoting interoperability and breaking down exclusivity barriers.

Incorporated as a non-profit Section-8 company, ONDC is backed by prominent organizations such as the Quality Council of India (QCI) and Protean, with an authorized capital of ₹500 crore. Leading banks and financial institutions have invested in its success.

Objectives of ONDC

Democratizing Commerce: Empower sellers of all sizes by breaking the dominance of large platforms.
Inclusivity: Provide access to the digital marketplace for small businesses, artisans, and local retailers.
Cost Efficiency: Reduce the cost of operations and customer acquisition for sellers.
Market Expansion: Integrate regional markets and enable participation across linguistic and geographic boundaries.
Consumer Empowerment: Offer buyers diverse choices and competitive pricing.

How ONDC Works

ONDC leverages open network protocols to facilitate seamless interaction between participants. Its key components include:

Decentralized Architecture: ONDC enables businesses to transact without owning e-commerce services.
Open Protocols: Standardized APIs ensure any platform can participate.
Role Segregation: Participants act as Buyer Applications, Seller Applications, Logistics Providers, or Technology Enablers.

Domains on the ONDC Network

The ONDC platform has expanded across several domains, including:

Domain	Categories
Food & Beverages	Continental, Regional Indian, Healthy Food, Desserts, Beverages
Grocery	Bakery, Fruits & Vegetables, Foodgrains, Baby Care
Fashion & Footwear	Men’s Apparel, Women’s Footwear, Kids’ Apparel
Electronics	Mobile Phones, Cameras, Televisions
Health & Wellness	Supplements, Medicated Hair Care, Elder Care, Pain Relief
Financial Services	Credit, Insurance, Investments
Agriculture	Agricultural Input, Output, and Services

Impact of ONDC

ONDC has brought about significant changes across India’s digital ecosystem:

1. Empowering MSMEs

MSMEs gain visibility on a national scale, reducing dependency on costly e-commerce platforms.
Interoperable protocols simplify operations such as cataloging, inventory management, and fulfillment.
Training programs and hand-holding support have enhanced their digital capabilities.

2. Promoting Economic Growth

ONDC’s integration fosters innovation, increases market efficiency, and boosts GDP growth.
By onboarding small businesses and artisans, it creates job opportunities across sectors like logistics, technology, and e-commerce.

3. Enabling Inclusivity

Tier 2 and Tier 3 cities, women entrepreneurs, and SC/ST-owned businesses now have equal opportunities to thrive.
Collaboration with the Digital India Program ensures widespread digital adoption.

Government Initiatives to Promote ONDC

ONDC has partnered with various ministries to ensure successful implementation:

MSME Ministry: The MSME-TEAM Initiative aims to onboard 5 lakh MSMEs, providing financial assistance for cataloging, logistics, and account management.
Ministry of Agriculture & Farmers Welfare: Helps Farmer Producer Organizations (FPOs) and farmers sell their produce digitally.
Startup India: Integrates startups into ONDC, fostering entrepreneurship.
Department of Fisheries: Enables fishermen and fisheries entrepreneurs to participate in e-commerce.

Key Achievements of ONDC

Geographic Coverage: Over 616 cities now participate in the ONDC network.
Expanded Services: ONDC now supports diverse categories, from Mobility to Financial Services.
ONDC Startup Mahotsav: A landmark event where 5,000 startups and industry stakeholders collaborated to advance e-commerce innovation.

Benefits for Sellers and Buyers

For Sellers

Cost Savings: Reduced platform fees.
Broader Reach: Access to a nationwide audience.
Skill Development: Training programs in 14 languages to enhance digital literacy.

For Buyers

Increased Choices: Access to a wide range of products and services.
Better Pricing: Competitive rates due to increased seller participation.

Awards and Recognition

ONDC has received accolades for its innovative approach:

Year	Award	Awarding Organization
2024	Application of Emerging Technologies	National Awards for e-Governance
2024	Tech Disrupter	Republic Business Emerging Technology Awards
2023	FinTech Company of the Year	Global FinTech Awards

Conclusion

ONDC symbolizes a bold and innovative step toward inclusive digital commerce. By addressing challenges posed by monopolistic platforms, empowering smaller players, and fostering interoperability, ONDC is driving India’s e-commerce revolution.

This initiative is not just a technological framework—it is a vision for the future that redefines digital commerce for inclusivity, innovation, and growth. As ONDC continues to evolve, its impact on India’s economy and society will undoubtedly be transformative.

Source: PIB and ONDC X account edited by BharatiyaMedia Team.