The government-run Open Network for Digital Commerce (ONDC) is witnessing robust participation from a diverse range of small businesses across India, including farmer producer organizations, Kanjeevaram silk weavers, and self-help groups such as Kerala's Kudumbashree, according to T Koshy, Managing Director and CEO.
Koshy elaborated on the inception and rapid growth of ONDC, an initiative by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce. Conceptualized amid the pandemic three years ago, ONDC was officially registered as a company in 2021 and began operations in select areas of Bengaluru by the end of 2022.
“In the last year and a half, ONDC has achieved significant traction”, Koshy said. “We’ve scaled from just 1,000 transactions 15 months ago to a staggering 9 million transactions in May. Similarly, our merchant base has expanded from 500 in January 2023 to 550,000 currently. Notably, about 85 percent of these are small and micro enterprises, including taxi drivers and artisans”.
ONDC aims to revolutionize digital commerce by broadening the reach of retail e-commerce in India, especially to small and micro enterprises that have traditionally been excluded from digital marketplaces.
Koshy highlighted that ONDC's appeal extends beyond major urban centers, with significant activity in tier II and III cities. "Approximately 40-45 percent of our transactions are related to mobility services, which are highly hyperlocal and currently operational in 8-9 cities. Moreover, around 65 percent of daily transactions come from tier II and III cities", Koshy noted. He added that transactions have taken place in roughly 1,000 cities across the country.
Describing ONDC as a 'network and not a platform', Koshy emphasized that its decentralized nature encourages participation from a wide array of small businesses. This inclusive approach has attracted participants from various sectors and regions, including farmer producer organizations, traditional silk weavers from Kanjeevaram, and self-help groups like Kudumbashree from Kerala.
“We are seeing enthusiastic engagement from small towns and villages", Koshy observed. “The participants making their products available on the network come from diverse backgrounds and regions, reflecting the network’s broad acceptance and potential for growth",
The rapid expansion of ONDC showcases its potential to transform India's digital commerce landscape by integrating a multitude of small businesses into the e-commerce ecosystem. This inclusivity is crucial for the network's goal of democratizing access to digital marketplaces and enhancing the digital presence of traditionally underserved sectors.
As ONDC continues to evolve, it aims to further penetrate the e-commerce market, providing small enterprises across India with greater opportunities to reach a wider audience and participate in the digital economy. The initiative's success in engaging such a wide range of small businesses highlights its potential to contribute significantly to India’s economic growth and digital transformation.