• It is an open-source digital commerce network that enables buyers and sellers to interact across platforms
• Moves away from a platform-centric model dominated by large marketplaces to a network-based architecture
• Launched in 2021 under the Department for Promotion of Industry and Internal Trade as part of Digital India
• Operates as a not-for-profit entity, unlike profit-driven e-commerce platforms
• Designed on the principles of interoperability, similar to how UPI transformed digital payments

Core Objectives of ONDC

• Democratisation of e-commerce by reducing dominance of a few large platforms
• Decentralisation to allow multiple buyer and seller apps to coexist
• Inclusivity for MSMEs, kirana stores, and local sellers
• Consumer empowerment through wider choices and competitive pricing
• Lower transaction costs by reducing intermediary control

How ONDC Works

• ONDC does not function as a single marketplace like Amazon or Flipkart
• Acts as a digital gateway connecting multiple buyer apps, seller apps, and logistics providers
• Buyers and sellers can interact across different applications using common protocols
• Enables discovery, ordering, payment, and delivery without platform lock-in

Understanding Open-Source Framework

• Open-source systems allow public access to underlying code for use and modification
• Encourages innovation, transparency, and competition
• Unlike closed systems such as proprietary operating software, open systems enable ecosystem-wide participation
• ONDC’s architecture allows startups and developers to build customised solutions

Potential Advantages of ONDC

Consumer-Centric Benefits

• Greater transparency in pricing and seller options
• Reduced dependence on algorithm-driven monopolies
• Potential for lower prices due to enhanced competition

Market Competition

• Breaks market concentration of existing e-commerce giants
• Creates a level playing field for new and small sellers
• Encourages innovation through open protocols

Support to Small Businesses

• Removes entry barriers for MSMEs and local vendors
• Enables digital participation without heavy platform commissions
• Strengthens local supply chains and livelihoods

Operational Efficiency

• Decentralised architecture reduces redundancy and inefficiencies
• Encourages cost-effective logistics and fulfilment solutions

Key Challenges Facing ONDC

Operational Complexity

• More complex than user-friendly systems like UPI
• Requires coordination across multiple independent applications

Consumer Behaviour Resistance

• Users are accustomed to integrated experiences offered by existing platforms
• ONDC must match expectations on ease, reliability, and speed

Dispute Resolution Gaps

• ONDC does not control the entire transaction lifecycle
• Issues related to delivery, quality, and after-sales service may increase

Weak Grievance Redressal

• Lack of a clear accountability framework for customer complaints
• Risk of declining trust if disputes are not resolved efficiently

Competition from Established Platforms

• Existing players offer loyalty programs, discounts, and bundled services
• ONDC lacks direct control over pricing and promotional strategies

Expert Committee Recommendations

• Adoption of open network protocols
• Ensuring interoperability across platforms
• Standardisation of e-commerce processes
• Strengthening data security and transparency
• Capacity building for small sellers and digital onboarding
• Creation of a robust regulatory and consumer protection framework

Way Forward for ONDC

Digital Infrastructure Strengthening

• Expansion of broadband connectivity, especially in rural areas
• Bridging the digital divide to ensure universal participation

Digital Literacy and Capacity Building

• Multilingual digital education for sellers and consumers
• Simplified interfaces to improve adoption among first-time users

Targeted MSME Outreach

• Incentives, training, and handholding for kirana stores and MSMEs
• Partnerships with state governments and industry bodies

Grievance Redressal Mechanism

• Creation of a single-window dispute resolution system
• Clear allocation of responsibilities among network participants

Conclusion

ONDC represents a structural reform in India’s digital economy, aiming to replicate the success of UPI in e-commerce. Its long-term success depends on trust-building, seamless user experience, strong dispute resolution, and ecosystem collaboration. If implemented effectively, ONDC can redefine inclusive growth, competition, and consumer choice in India’s rapidly expanding digital marketplace.