A few years back, when the Open Network for Digital Commerce (ONDC) was first launched, it was expected to break the monopoly of established e-commerce giants.
A few large players have come to dominate the e-commerce space. The ONDC will democratise digital commerce and provide equal opportunities to all segments, especially small retailers and start-ups.
This digital network, developed with Government support, initially received an overwhelming response, shaking the dominance of these big players. Since ONDC is a non-profit e-commerce platform not focused on maximising profits, orders placed here are generally cheaper compared to platforms like Swiggy or Zomato.
In 2022, ONDC began as a pilot project in five cities, but quickly it expanded to nearly 600 cities. Orders, especially from Tier-2 and Tier-3 cities, saw significant growth. By October 2024, retail orders had reached 6.5 million, but by early 2025, this number dropped to 4.6 million, reducing retail’s share in total transactions from 47 per cent to just 29 per cent.
A May 2025 survey by Local Circles further highlighted ONDC’s struggles — only 15 per cent of e-commerce users had used ONDC for orders, 54 per cent reported poor experiences, and 35 per cent cited bad customer service.
While ONDC offers cheaper products by directly connecting buyers and sellers, its lack of adoption suggests deeper issues.
Limited product availability, poor user-friendliness, and insufficient reviews and ratings are key problems driving users to other platforms.
ONDC’s rapid growth benefits everyone, so the Government must refine its strategy. The Ministry of Commerce and Industry should launch a large-scale cam paign to promote ONDC, encouraging corporates to prioritise purchases from MSMEs via the platform.
In simpler terms, corporates should be incentivised to buy goods and services from Micro, Small, and Medium Enterprises (MSMEs) through ONDC.
The Government could introduce an MSME Procurement Incentive Policy for corporates, with key provisions like:
Tax Breaks: Offer corporates a fixed percentage tax deduction for sourcing from MSMEs via ONDC, provided they meet certain criteria (e.g., minimum purchase thresholds, ESG compliance).
Supplier Diversity: Encourage corporates to diversify their supplier base, reduce reliance on large vendors, and foster innovation by sourcing from MSMEs.
ESG Goals: Recognise and reward corporates using ONDC to meet ESG (Environmental, Social, and Governance) targets, such as reducing carbon footprints, promoting sustainability, and supporting marginalised communities.
Reporting & Verification: Establish a tracking mechanism to ensure compliance and transparency in corporate procurement practices.
Implementing such a policy would have multiple benefits as more MSMEs would join the digital economy, boosting economic growth and job creation. Corporations would adopt sustainable procurement practices, improving their ESG performance.
Supply chains would become more diverse, reducing dependency on big suppliers and fostering innovation. To execute this policy effectively, the Government should emphasise ONDC as the preferred platform for corporate-MSME transactions. Govt bodies should collaborate with other official agencies to provide support and resources to participating MSMEs and corporates. They should develop a monitoring mechanism to assess the policy’s impact regularly. In brief, this policy would not only boost ONDC’s adoption but also create an ecosystem where both corporates and MSMEs can thrive, shaping a brighter future for India’s digital commerce landscape.
(The author is a CA empowering women, startups and policy. Views are personal)
