The Open Network for Digital Commerce (ONDC) is a concept and a set of protocols and specifications for an open e-commerce network, not a single application or platform. It is a state-owned technology initiative launched by the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India. The entity leading the initiative was incorporated on December 31, 2021, as a private non-profit Section 8 company.
The initiative was created to solve the problem of monopoly and power concentration by a few large e-commerce platforms, which led to concerns about unfair trade practices and the marginalization of smaller businesses. Its goal is to democratize digital commerce by shifting from a platform-centric model to an open, interoperable one.
ONDC functions as an intermediary layer using a set of protocols that allow different e-commerce platforms to connect and interoperate. The core mechanism is built on the Beckn protocol, an open-source framework that enables decentralized e-commerce. This mechanism unbundles the transaction into separate components like discovery, ordering, and fulfillment, with various entities such as buyer apps, seller apps, and ONDC gateways operating independently.
ONDC is often compared to the Unified Payments Interface (UPI), as both are government-backed digital public infrastructures designed to make services platform-agnostic. It is an initiative of the DPIIT under the Ministry of Commerce and Industry.
Recently, ONDC has expanded its scope beyond retail into categories like Mobility, Financial Services, and Food & Beverages. Key additions include the launch of Saarthi, a reference application developed with Bhashini to enable multilingual buyer-side apps, and a new digital lending initiative. However, the network has also seen a reduction in financial incentives for the retail sector, with the monthly cap dropping from ₹3 crore to approximately ₹30 lakh.