Digital Commerce Revolution: ONDC, GeM, and the Supporting Ecosystem

India’s Digital Commerce Revolution: ONDC, GeM, and the Supporting Ecosystem

India is redefining digital commerce through a transformative ecosystem led by the Open Network for Digital Commerce (ONDC) and Government e-Marketplace (GeM), bolstered by initiatives like Aadhaar, UPI, DigiLocker, UMANG, BharatNet, Startup India, Jeevan Pramaan, IndiaAI, and the Centre of Excellence in Blockchain Technology. ONDC, launched in 2021, democratizes e-commerce by connecting 370,000 sellers across 588 cities, achieving 14.45 million transactions in November 2024. GeM, operational since 2016, streamlines government procurement, hitting ₹4.09 lakh crore in FY24-25, with 57% from MSMEs. Supporting initiatives provide digital identity, payments, and connectivity, fostering inclusivity and innovation. Major players like Paytm, Magicpin, and Flipkart drive ONDC’s growth, while GeM empowers small businesses. Together, they aim to break monopolies, empower rural markets, and position India as a global digital commerce leader, with a projected $340 billion impact by 2030.

---

A Bold Vision for India’s Digital Future

India, home to 1.4 billion people and 950 million internet users, is on the cusp of a digital commerce revolution. The Digital India initiative, launched in 2015, has catalyzed a suite of programs to make digital markets inclusive, transparent, and efficient. At the heart of this transformation are the Open Network for Digital Commerce (ONDC) and Government e-Marketplace (GeM), supported by foundational infrastructure like Aadhaar, UPI, and BharatNet. “ONDC is to e-commerce what UPI is to payments—a game-changer for inclusivity,” declares Nandan Nilekani, ONDC’s advisory council member. This expanded analysis dives deep into the objectives, origins, execution, metrics, and future potential of these initiatives, enriched with real anecdotes, stakeholder quotes, and critical insights. It explores how these efforts are empowering small businesses, challenging monopolies, and reshaping India’s $3 trillion economy.

---

The Open Network for Digital Commerce (ONDC): Democratizing E-Commerce

Objectives

Launched in 2021 by the Department for Promotion of Industry and Internal Trade (DPIIT), ONDC aims to transform India’s e-commerce landscape by shifting from a platform-centric model dominated by giants like Amazon and Flipkart to an open, interoperable network. “ONDC is not an app but a set of specifications fostering connections between shoppers, platforms, and retailers,” explains a DPIIT official. Its core objectives include:

• Democratization: Enabling MSMEs and small retailers to compete with large platforms by reducing entry barriers and commissions (capped at 3% vs. 30% on proprietary platforms).
• Inclusivity: Expanding e-commerce to rural and semi-urban areas, targeting 25% of domestic digital commerce by 2024.
• Interoperability: Standardizing processes like cataloguing, order fulfillment, and dispute resolution using the Beckn protocol.
• Data Privacy: Ensuring data remains siloed within buyer and seller apps, preventing monopolistic data control. “ONDC’s privacy model is a bold step,” says a QCI spokesperson.
• Sectoral Expansion: Extending beyond retail to mobility, healthcare, and fintech, creating a versatile ecosystem.

Germination and Execution

ONDC’s inception stemmed from concerns over market concentration, where Amazon and Flipkart controlled pricing and data, marginalizing small sellers. “We saw how UPI leveled the payment landscape; ONDC does the same for commerce,” Nilekani asserts. Incubated by the Quality Council of India (QCI) with ₹10 crore initial funding, ONDC began as a pilot in five cities in April 2022, expanding to 588 cities by November 2024.

• Milestones:
• From 25,000 daily retail orders in 2023 to 14.45 million monthly transactions in November 2024, with 40% from mobility (e.g., Namma Yatri’s 25,000 daily rides).
• Over 370,000 sellers, 70% MSMEs, onboarded, supported by 20+ investors like SBI and PNB (₹255 crore total investment).
• Introduced digital lending in August 2024, offering loans in 6 minutes, and Saarthi, a multilingual app supporting five languages (expanding to 22).
• Challenges:
• Scalability issues due to technical complexity, as noted by critics: “ONDC’s decentralized model is harder to scale than UPI.”
• Limited awareness among small merchants. “Many retailers don’t know ONDC exists,” says a Bengaluru shopkeeper.
• Data privacy concerns, especially with Amazon’s partial integration. “We must ensure no data monopolies,” warns a privacy advocate.
• Anecdote: Priya, a grocery store owner in Bengaluru, joined ONDC via Mystore in 2023. “Big platforms charged 25% commissions, killing my margins. ONDC’s 3% fee and Paytm’s reach doubled my revenue to ₹2 lakh monthly,” she shared, highlighting ONDC’s MSME empowerment.

Major Companies Involved

ONDC’s ecosystem includes diverse participants:

1. Paytm: A buyer-side app leveraging 300 million users for food and grocery orders. “Paytm’s scale amplifies ONDC’s reach,” says CEO Vijay Shekhar Sharma.
2. Magicpin: Manages 90% of ONDC’s food orders, with 70,000 restaurant partners and 15x order growth. “We’re disrupting food delivery’s high-commission model,” says CEO Anshoo Sharma.
3. Flipkart (Ekart): Provides logistics, with potential full integration. “Ekart’s hyperlocal delivery is key,” says a Flipkart executive.
4. Amazon: Exploring integration but cautious due to CCI scrutiny. “Amazon’s onboarding could be transformative,” says Goyal.
5. PhonePe (Pincode): Buyer app for hyperlocal commerce, leveraging 400 million users.
6. Meta (WhatsApp): Enables conversational commerce for 500,000 MSMEs. “WhatsApp will redefine e-commerce access,” says a Meta spokesperson.
7. Dunzo: Supports last-mile delivery in cities like Bengaluru.
8. Zoho (Vikra): Launched a seller app in 2024, simplifying MSME onboarding. “Vikra empowers small businesses,” says Zoho’s CEO Sridhar Vembu.
9. Protean eGov: Gateway for discoverability, integrating ONDC with platforms like Waves.
10. Namma Yatri: Mobility partner, saving drivers 25% on commissions. “We’re empowering drivers directly,” says a Juspay executive. 11–15. SBI, PNB, Kotak, Axis, SIDBI: Financial promoters enabling digital lending. 16–20. ICICI, HDFC, NPCI, BSE, CDSL: Support payments and investments.
11. Snapdeal: In advanced integration, expanding product listings.
12. Dhiway (Confidex): Blockchain-based scoring for trust. 23–25. MF Utilities, Aditya Birla Health, Bajaj Allianz: Offer sachet investments and insurance.

---

Government e-Marketplace (GeM): Streamlining Public Procurement

Objectives

Launched in August 2016, GeM is a centralized platform replacing the Directorate General of Supplies and Disposals (DGS&D), designed to make government procurement transparent and efficient. “GeM is about cutting corruption and saving costs,” says Commerce Minister Piyush Goyal. Its objectives include:

• Transparency: A contactless, paperless, cashless system with online vendor verification.
• Efficiency: E-bidding and reverse auctions save up to 25% on costs, reducing India’s fiscal deficit.
• Inclusivity: Empowers MSMEs (57% of business) and women via Womaniya and SWAYATT.
• Digital Transformation: Integrates with UPI and Aadhaar, aligning with Digital India.

Execution and Achievements

Managed by GeM SPV, a Section 8 company, GeM has scaled rapidly:

• GMV: ₹4.09 lakh crore in FY24-25 (10 months), with services (₹2.54 lakh crore) at 62%. “GeM’s growth is unprecedented,” says CEO Prashant Kumar Singh.
• User Base: 23 lakh sellers, 1.6 lakh buyers, offering 7,400 products across 150 categories.
• Inclusivity: Initiatives like Startup Runway and The Green Gold Collection (bamboo products) support startups and sustainability.
• Awards: Won CIPS Best Use of Digital Technology (2021) and Digital India Platinum Award (2018).
• Anecdote: In Assam, a women-led SHG secured a ₹5 crore GeM contract for bamboo products in 2024. “GeM gave us visibility and jobs for 50 families,” said the SHG leader.

Challenges

• Adoption Gaps: Some state agencies resist transitioning from traditional procurement. “Standardization is a marathon,” says a GeM official.
• Complexity: Diverse government needs require continuous platform upgrades.

---

Supporting Initiatives: The Digital Backbone

1. Aadhaar

• Role: Provides biometric identity for 1.3 billion citizens, enabling KYC for GeM and ONDC.
• Impact: Saved ₹2.7 lakh crore via DBT. “Aadhaar is the trust anchor,” says UIDAI’s CEO Ajay Bhushan Pandey.
• Challenge: Privacy concerns persist, with the Supreme Court limiting mandatory usage.

2. UPI

• Role: Powers 1.6 billion monthly transactions (₹20.95 lakh crore, December 2024). “UPI’s interoperability drives ONDC’s success,” says NPCI’s CEO Dilip Asbe.
• Anecdote: A rural ONDC seller in Uttar Pradesh noted, “UPI’s instant payments from urban buyers transformed my cash flow.”
• Challenge: Cybersecurity risks require robust safeguards.

3. DigiLocker

• Role: Stores 6 billion documents for 200 million users, streamlining GeM’s vendor verification. “DigiLocker cuts onboarding time by 50%,” says a MeitY official.
• Challenge: Rural adoption lags due to connectivity issues.

4. UMANG

• Role: Integrates 1,200+ government services, supporting GeM’s buyer access. “UMANG simplifies e-governance,” says a MeitY spokesperson.
• Challenge: Limited rural penetration due to low smartphone use.

5. BharatNet

• Role: Connects 1.5 lakh Gram Panchayats, enabling rural ONDC and GeM access. “BharatNet is the highway for rural commerce,” says a telecom official.
• Impact: Supports 3 lakh Grameen e-Stores.
• Challenge: Slow rollout and low utilization in some areas.

6. Startup India

• Role: Supports 80,000+ startups, integrating with GeM’s Startup Runway and ONDC’s Startup Mahotsav. “Startups drive ONDC’s innovation,” says a DPIIT official.
• Impact: Created 100+ unicorns, boosting e-commerce.

7. Jeevan Pramaan

• Role: Digitizes pension certificates for 6 crore pensioners. “Jeevan Pramaan frees resources for digital commerce,” says a pension official.
• Impact: Enhances financial inclusion for ONDC’s consumer base.

8. IndiaAI Mission

• Role: Develops AI tools for ONDC (e.g., generative AI for catalogs). “AI will personalize e-commerce,” says an IndiaAI researcher.
• Impact: Launched AI chatbot for PM-Kisan, aiding farmers.

9. Centre of Excellence in Blockchain Technology

• Role: Enhances security for ONDC and GeM. “Blockchain ensures trust in decentralized systems,” says a Dhiway executive.
• Impact: Supports five live blockchain chains.

---

Interplay and Synergies

ONDC and GeM complement each other within the Digital India ecosystem:

• ONDC: Targets private e-commerce, aiming for 90 crore buyers by 2027. “ONDC breaks monopolies,” says Goyal.
• GeM: Focuses on government procurement, serving 1.6 lakh public buyers. “GeM’s efficiency is unmatched,” says Singh.
• Synergies: Shared infrastructure (Aadhaar, UPI, DigiLocker) and rural outreach via BharatNet and CSCs. “CSCs are the bridge for rural sellers,” says a MeitY official.
• Challenges: ONDC’s data privacy concerns and GeM’s adoption gaps require robust governance. “Transparency is non-negotiable,” warns a policy expert.

Supporting initiatives amplify impact:

• Aadhaar and UPI: Ensure trust and seamless payments.
• BharatNet: Connects rural markets, critical for ONDC’s 25% penetration goal.
• IndiaAI and Blockchain: Drive innovation and security.

---

Future Expectations (2025–2030)

• ONDC: Targets 50 lakh daily orders by 2025, 90 crore buyers by 2027, and $340 billion in consumption by 2030. “ONDC will create multiple unicorns,” predicts Nilekani.
• GeM: Aims for ₹5 lakh crore GMV by FY25-26, expanding services. “GeM will redefine public procurement,” says Goyal.
• Supporting Initiatives: BharatNet to connect all Gram Panchayats by 2026; IndiaAI to deploy 10,000 GPUs. “India’s digital model could go global,” says a tech analyst.
• Global Impact: ONDC’s open protocol could inspire international adoption, akin to UPI’s expansion to Singapore and UAE.

---

Reflection

India’s digital commerce ecosystem, led by ONDC and GeM, is a testament to its ambition to create an inclusive, transparent, and innovative market. ONDC’s 14.45 million monthly transactions and 370,000 sellers—70% MSMEs—signal a shift from monopolistic platforms to a decentralized network empowering small businesses like Priya’s grocery store. GeM’s ₹4.09 lakh crore GMV, with 57% from MSMEs, showcases its role in transforming public procurement, as seen in the Assam SHG’s ₹5 crore contract. “ONDC and GeM are two sides of the same coin—empowering the small while scaling the big,” says a DPIIT official.

Yet, challenges persist. ONDC’s complexity risks alienating non-tech-savvy sellers. “Switching from familiar platforms is tough,” admits a retailer. Data privacy concerns, especially with Amazon’s involvement, demand robust governance. “We can’t let data monopolies creep in,” warns a privacy advocate. GeM faces adoption hurdles, with state agencies clinging to legacy systems. “Standardization is a marathon,” notes a GeM official. Rural connectivity, despite BharatNet’s progress, lags, limiting scale.

The ecosystem’s strength lies in its synergy. UPI’s 1.6 billion transactions and Aadhaar’s 1.3 billion identities provide trust and efficiency. BharatNet’s rural connectivity and Startup India’s 80,000+ startups fuel growth, while IndiaAI and blockchain promise smarter, secure systems. “This is India’s digital moonshot,” says a tech entrepreneur. Success hinges on addressing privacy, scalability, and awareness. ONDC’s Section 8 status outside RTI scrutiny risks trust, as noted: “Public accountability is critical.”

By 2030, ONDC’s $340 billion potential and GeM’s ₹5 lakh crore target could redefine India’s digital economy. “India is building a global model,” says Goyal. Sustained investment, rural outreach, and grievance mechanisms are vital. For small businesses like Priya’s or the Assam SHG, these initiatives are lifelines, proving that India’s digital revolution is about empowering the grassroots as much as competing globally.

---

References

1. Open Network for Digital Commerce - Wikipedia
2. What is ONDC, Open Network for Digital Commerce Features - Business Standard
3. ONDC | Open Network for Digital Commerce - ondc.org
4. Open Network for Digital Commerce: The Multiverse of Platforms - PYMNTS.com
5. Explained | What is the Open Network for Digital Commerce? - The Hindu
6. What Is ONDC (Open Network for Digital Commerce)? - IBM
7. Revolutionizing Digital Commerce: The ONDC Initiative - pib.gov.in
8. Explained: Govt’s Open Network for Digital Commerce - The Indian Express
9. What is the ONDC and How Will it Impact Online Retailers in India? - india-briefing.com
10. The Next UPI: What is ONDC, India’s Open Network for Digital Commerce? - thequint.com
11. Open Network for Digital Commerce: An Explainer - internetfreedom.in
12. Open Network for Digital Commerce - drishtiias.com