How ONDC Could Transform B2B Commerce in India

Introduction

What if every small business in India could compete on equal terms with e-commerce giants? Despite impressive growth in B2B digital commerce, this remains a distant dream for most MSMEs. High onboarding costs, platform lock-ins, and limited digital access have created an uneven playing field where only the well-resourced thrive.

The Open Network for Digital Commerce (ONDC) is changing that equation, transforming digital commerce from an advantage of the few into an opportunity for all. Backed by the Government, ONDC India aims to even-up digital quick commerce by creating an open, interoperable network where businesses of all sizes can participate without being locked into platform-centric ecosystems.

What is ONDC?

The Open Network for Digital Commerce (ONDC) is an open ecommerce initiative designed to enable interoperability across various platforms to promote connectivity between shoppers, platforms, and retailers. Unlike conventional e-commerce platforms that operate as closed ecosystems, ONDC is not a marketplace itself but a network protocol that allows buyers and sellers to connect through any ONDC-compliant application.

The purpose of ONDC is to unbundle digital commerce by separating key elements such as buyer interface, seller interface, logistics, and payment solutions. This ensures that businesses are not bound to one platform’s rules and fees but can freely interact with consumers and partners across the network.

The History of ONDC: Origin, Pilot Phases & Timeline

ONDC was officially announced in April 2022 with the goal of opening digital trade in India. The initiative was conceptualized by the Department for Promotion of Industry and Internal Trade (DPIIT), with the Quality Council of India (QCI) playing a central role in its implementation.
The pilot phase began in select cities, including Bengaluru, Delhi, Coimbatore, Bhopal, and Shillong. Following positive results, ONDC expanded across multiple sectors, including retail, mobility, logistics, and food delivery.

Key stakeholders include government agencies, financial institutions, logistics providers, and technology companies. Over time, ONDC has gained traction with major banks, fintech firms, and logistics providers joining the network. It has been recognized globally as a pioneering model for open digital commerce, with rapid adoption milestones marking its progress.

How Does ONDC Work?

ONDC operates on an open protocol that facilitates interoperability among various digital commerce participants. At its core, ONDC B2B marketplace enables different applications, buyer apps, seller apps, logistics providers, and payment gateways, to communicate seamlessly through standardized APIs. The decentralized structure means that no single entity owns the network. Buyers can use any ONDC-enabled app such as Paytm, PhonePe, Mystore, Craftsvilla, and more to discover sellers across the network.

While sellers can onboard through multiple seller-side applications. Logistics and payment providers are integrated as plug-and-play services, ensuring businesses have a complete ecosystem at their disposal. For SMBs and MSMEs, onboarding involves digital cataloguing, linking with logistics partners, and ensuring compliance with standardized data formats and data warehousing in place. Unlike traditional e-commerce platforms, ONDC reduces reliance on one dominant platform, thereby offering businesses greater freedom and reach.

Objectives of ONDC

The Open Network for Digital Commerce was born with the vision of bringing change in India’s digital commerce environment to make it a more inclusive ecosystem. Its objectives go beyond just enabling online transactions; they are designed to foster competition, empower businesses of all sizes, and broaden the scope of digital inclusion.

• Leveling the Playing Field for SMBs/MSMEs – ONDC India seeks to lower the entry barriers for small and medium businesses by reducing dependence on large, closed platforms. ONDC for MSMEs offers access to a shared digital infrastructure, even smaller enterprises can gain visibility and compete on equal footing with bigger players.
• Breaking Platform Monopolies – A major goal of ONDC B2B is to dismantle monopolistic tendencies in digital commerce. Unlike traditional platforms that control buyer and seller interactions, ONDC unbundles these functions, giving businesses the freedom to operate without restrictive conditions or high commissions.
• Boosting Digital Inclusion Across Geographies and Sectors – ONDC aims to extend digital commerce platform benefits beyond urban areas, reaching rural and semi-urban markets where many businesses are still offline. This helps bring traditionally underserved regions and sectors into the formal digital economy.
• Facilitating Innovation and Ecosystem Growth – By offering an open, interoperable network, ONDC encourages innovation from technology providers, logistics firms, fintech players, and startups. It creates a fertile environment for new business models, services, and sector-specific solutions to thrive.

Key Benefits of ONDC for Network Participants

• For SMBs/MSMEs: ONDC significantly lowers entry costs, reducing dependence on intermediaries and platform commissions. It enhances visibility by allowing businesses to be discovered by buyers across multiple apps, expanding market access and enabling them to tap into new B2B opportunities. Additionally, SMBs gain access to digital cataloguing, inventory management, and logistics integration and fleet management, which streamline operations.
• For Large Enterprises: Larger businesses benefit from a broader sourcing base, which can lower procurement costs and improve supply chain resilience. The open model allows them to diversify vendors and reduce dependency on specific suppliers.
• For Tech/Service Partners (Logistics, Payments): ONDC encourages innovation by enabling service providers to plug into the network and co-create solutions. This ensures efficient order fulfillment and seamless payment processes while opening avenues for new business models.
• For Government and Regulators: ONDC enhances transparency in digital transactions, improving tax compliance and enabling better oversight of e-commerce activities. It also contributes to overall sector growth and aligns with the government’s digital transformation vision.

How ONDC is Reshaping B2B Trade in India

ONDC is emerging as a game-changer in the B2B area by creating equal opportunities for SMBs, which historically struggled to compete with larger enterprises. By offering a transparent, interoperable network, ONDC enables wholesalers, small retailers, and regional suppliers to participate in markets that were once dominated by large-scale players. This gives rights to bringing new momentum to India’s B2B digital trade.

• Empowering SMB Onboarding and Success Stories – Early adoption shows that small wholesalers and retailers who once had limited reach can now join the network with minimal barriers. By gaining digital visibility, they are expanding their customer base and tapping into new markets. Financial management software helps SMBs stay organized, save time, and make smarter financial decisions.
• Expansion into Core B2B Sectors – ONDC impact on trade is extending its footprint beyond retail and food delivery into wholesale, industrial supplies, farm inputs, and other critical B2B sectors. Digital transformation has become the new face of industrial sectors as well with growing need of improved collaboration, cloud computing, and similar trends. This creates structured digital pathways for industries that previously relied heavily on offline interactions.
• Solving B2B Pain Points – ONDC addresses persistent challenges such as fragmented supply chains, difficulty in supplier discovery, lack of transparent negotiations, and compliance issues. Its open structure makes transactions more efficient and reliable for both buyers and sellers.
• Enabling Interoperability Across Markets – By bridging B2C and B2B commerce on the same open protocol, ONDC creates a unified environment where businesses can serve diverse buyers, urban retailers, rural wholesalers, and institutional buyers, without being confined to a single platform.

Challenges & Considerations

Despite its promise, ONDC faces significant challenges. Onboarding traditional businesses requires addressing digital literacy gaps, as many SMBs lack familiarity with digital tools. Integrating legacy systems with ONDC’s standardized cataloguing also poses difficulties.

Quality control and trust in B2B transactions remain key concerns, with mechanisms for dispute resolution and compliance yet to be fully streamlined. Additionally, the success of ONDC relies heavily on adoption pace and network effects, as its value increases only when more participants join the ecosystem.

The Future of ONDC; What Lies Ahead for Indian B2B Trade

The government has set ambitious goals for ONDC, including onboarding over 500,000 MSMEs by 2027. As the network grows, industry-specific B2B solutions are expected to emerge, catering to sectors like manufacturing, healthcare supplies, and agriculture.

ONDC’s success could significantly contribute to India’s GDP by strengthening SMB participation in digital commerce, creating employment opportunities, and encouraging innovation. If adoption scales effectively, ONDC may serve as a global model for inclusive and interoperable digital trade.

Conclusion

ONDC has the potential to transform India’s B2B commerce by empowering SMBs and creating a level playing field in digital trade. Its open, interoperable structure ensures that businesses of all sizes can participate, innovate, and compete without being constrained by monopolistic platforms.
For SMBs, large enterprises, service providers, and policymakers, ONDC represents a unique opportunity to redefine digital commerce in India. The path ahead may involve overcoming adoption and operational challenges, but the long-term impact promises a more inclusive, transparent, and competitive marketplace.