In a strategic move to enhance growth, the Open Network for Digital Commerce (ONDC) has set its sights on small and medium enterprises (SMEs) by focusing on businesses associated with the Government e-Marketplace (GeM) and beneficiaries of various Production-Linked Incentive (PLI) schemes. According to Mr. T. Koshy, the Managing Director of ONDC, the organization aims to amplify its business operations significantly, aspiring to increase monthly transactions from over 12.5 million to between 30 and 40 million by the conclusion of the fiscal year 2025. This expansion is expected to be realized through the onboarding of SMEs possessing catalogable products.
Mr. Koshy emphasized that the diversity of enterprises joining the platform is broadening, with numerous philanthropic organizations and Corporate Social Responsibility (CSR) foundations lending support to small and micro-entrepreneurs to engage with the network. Additionally, there is interest from various sectors, including media, gaming, and spirituality, which seek to integrate their ecosystems into the ONDC framework. For instance, the International Society for Krishna Consciousness (ISKCON) is facilitating the purchase of ‘prasad’ through the platform, exemplifying the diverse ecosystem ONDC envisions.
Analyst Karan Taurani from Elara Capital noted the substantial momentum gained from ONDC’s approach to expanding into additional cities. He also mentioned that the participation of large conglomerates is beneficial for increasing the consumer base; however, he cautioned that ONDC faces challenges in achieving significant scale due to the prevalent deep discounting practices and suboptimal user experiences. Mr. Koshy abstained from commenting specifically on plans concerning the GeM and PLI beneficiary sectors but acknowledged their importance.
A government official disclosed that ONDC has been encouraged to leverage the opportunities available within GeM and among PLI beneficiaries, attributing GeM’s impressive growth and the expanding list of PLI beneficiaries to the underlying effectiveness of these initiatives.
GeM, which was established in 2016, has emerged as a premier online platform for government procurement, ranking as the third-largest globally in this category. With over 63,000 government buyer organizations and more than 6.2 million sellers and service providers, GeM has recently experienced a remarkable increase in commerce, as evidenced by a gross merchandise value (GMV) of ₹1,24,761 crore during the first quarter of 2024-25, marking a 136% year-on-year growth.
Government reports indicate that services procured through GeM surged by 205% in the fiscal year 2023-24, with notable contributions from micro and small enterprises (MSEs).
The PLI scheme, initiated post-COVID-19, aims to stimulate local manufacturing by incentivizing domestic production. Projections suggest that total sales under the 11 identified PLI schemes may exceed ₹35 trillion, with domestic sales contributing approximately ₹23 trillion.
Launched in 2021, the ONDC initiative seeks to democratize digital commerce and reduce the dominance of major e-commerce platforms. Recently, Prime Minister Narendra Modi recognized the fintech sector’s vital role in enhancing the quality of life through innovative products, citing ONDC and the Unified Payments Interface (UPI) as exemplars of success. He reiterated the importance of India’s burgeoning fintech ecosystem in improving global living standards.
In conclusion, ONDC’s targeted approach towards SMEs connected with GeM and PLI beneficiaries, coupled with its growth aspirations, represents a significant step toward democratizing digital commerce in India and fostering economic inclusion across diverse sectors.
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