How India’s Open Network for Digital Commerce [ONDC] Could Rewire Small Business Growth

India’s Open Network for Digital Commerce, or ONDC, is one of the most important experiments underway in the country’s digital economy because it seeks to change not just who participates in e-commerce, but how e-commerce itself is structured. Launched in 2022 under the Department for Promotion of Industry and Internal Trade, ONDC is not a marketplace in the conventional sense and not another shopping app competing for downloads. It is an open, interoperable network built on shared digital protocols that allows buyers, sellers, logistics providers and technology players to transact across compatible platforms. In simple terms, its ambition is to do for digital commerce what UPI did for digital payments: create common rails on which many businesses can operate, instead of forcing everyone into a few closed platforms.

For MSMEs, this matters because the existing e-commerce model has often been a mixed blessing. Large marketplaces gave small businesses reach, but they also concentrated power over discovery, customer access, pricing visibility, platform fees and merchandising. In many cases, a small seller could go online only by accepting rules written by someone else. ONDC offers a different possibility. A seller joining through one ONDC-compatible seller app can potentially be discovered by customers using many different buyer apps across the network. That changes the logic of digital commerce from platform dependency to network participation, which is a significant shift for smaller businesses that lack deep marketing budgets or bargaining power.

This is why ONDC has particular relevance for India’s micro, small and medium enterprises. It is designed to widen market access for retailers, local manufacturers, artisans, self-help groups, farmer collectives and homegrown brands that may have viable products but weak digital visibility. Official material around ONDC has consistently positioned it as a way to democratise commerce and give smaller sellers a fairer chance to compete online. Government data has also shown that the network has moved beyond the experimental phase and entered meaningful scale, with over 1.16 lakh retail sellers live across more than 630 cities and towns as of December 2025, and roughly 206,000 merchants having conducted at least one transaction by the end of that year. Those figures do not automatically prove commercial success for every seller, but they do show that ONDC is no longer just an idea on paper.

The real strength of ONDC lies in the way it unbundles commerce. Traditional marketplaces often controlled the entire customer journey within a single digital enclosure, from product discovery to payments and delivery. ONDC breaks that model apart. Buyer applications bring users into the network. Seller-side participants onboard merchants and manage their catalogues. Logistics players can handle fulfilment. Technology service providers can support businesses that do not have their own digital stack. No single participant needs to control the full transaction chain. For MSMEs, that modular structure is important because it lowers the barrier to entry. A small business does not need to build an entire e-commerce ecosystem from scratch; it can plug into one.

That makes ONDC especially valuable for neighbourhood retailers, small manufacturers, niche D2C brands and local service-oriented businesses that have often struggled with the cost and complexity of online selling. A seller can register once through a compatible network participant and potentially display products across multiple buyer-facing apps. That reduces dependence on app-specific visibility strategies and costly customer acquisition. Many small businesses do not fail online because they lack a good product. They fail because cataloguing is weak, digital discovery is expensive, logistics are inconsistent and platform dependence erodes margins. ONDC is trying to reduce exactly those structural disadvantages.

Its importance is also amplified by the breadth of the sectors it can accommodate. ONDC is not limited to one narrow retail category. The network architecture supports multiple domains, including grocery, food and beverages, fashion, electronics, home and kitchen, health and wellness, mobility, agriculture, B2B trade and logistics. That matters in the Indian context because MSMEs are not confined to lifestyle brands or urban merchants. They include textile units, food processors, furniture makers, craft clusters, wholesalers, farmers, service providers and countless local enterprises whose path to digital commerce has historically been fragmented. ONDC’s network model is relevant precisely because it is broad enough to include this diversity.

For MSMEs, the practical promise of ONDC can be understood through three core advantages: wider market access, potentially better cost dynamics and greater control. First, it expands discoverability beyond a single platform. A seller no longer has to rely entirely on one marketplace’s algorithm or policy environment. Second, because the network is open and interoperable, competition among service providers could help keep transaction and enablement costs more competitive, though actual commercial terms will still vary depending on the participant a seller chooses. Third, ONDC may allow sellers to retain more agency over how they present their products and manage operations, rather than surrendering every layer of the relationship to a dominant intermediary.

This could be particularly significant for manufacturing-led MSMEs. A small furniture maker, food brand, handicraft producer or component supplier often faces a difficult choice in the digital age: remain local and invisible, or join a large platform and become dependent on its ecosystem. ONDC is an attempt to create a third path, where digital access does not necessarily require strategic surrender. Its broader framework also includes Digital Enablement Agencies, which are intended to help bring less-digitised sellers into the network, including artisans, weavers, farmers, fishermen and producer collectives. That is an important feature in a country like India, where the commerce problem is not only about market access but also about digital readiness, onboarding support and last-mile capability.

That last point deserves emphasis. For small businesses, the hardest part of online expansion is often not getting listed, but becoming operationally ready. ONDC’s broader support architecture reflects this reality. Sellers still need clear catalogues, accurate inventory, proper packaging, reliable dispatch systems, payment readiness and grievance handling. Programmes linked to ONDC’s ecosystem, such as digital-readiness assessments, underline the fact that open access alone is not enough. A network can open the door, but the business still has to walk through it with discipline.

This is why ONDC should be seen not as a miracle cure, but as a structural opportunity. It cannot automatically turn every small seller into a digital success story. The fundamentals of commerce still matter: product quality, pricing, service consistency, fulfilment speed, returns handling and customer trust. Visibility across a network is useful, but conversion depends on execution. Nor does ONDC eliminate competition. In fact, by lowering barriers and broadening participation, it may intensify competition. That is healthy in principle, but it also means MSMEs will have to become sharper, more responsive and more operationally disciplined if they want to benefit fully.

Even so, the larger significance of ONDC is hard to ignore. It reflects India’s wider digital public infrastructure approach, where common rails are created so that participation is not restricted to a few dominant players. Just as UPI changed payments by making interoperability central, ONDC is trying to bring the same philosophy to commerce. For MSMEs, that makes it more than a technology project. It is a potentially important shift in market design. If it matures successfully, ONDC could help thousands of small businesses move from being locally known but digitally invisible to being discoverable participants in a much broader commercial network, without requiring them to hand over all control to a single platform. For a country where MSMEs are central to employment, manufacturing, local entrepreneurship and distributed growth, that is a meaningful change. ONDC may not guarantee success, but it does attempt to make the rules of digital commerce fairer for those who have historically entered the game at a disadvantage.

Reference:

https://www.ondc.org

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2235812&lang=2&reg=3

https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2146920&reg=3&lang=2