"Connecting communities, empowering nations: Unifying the Regional and Global Economy ."

India’s digital public infrastructure has earned international admiration for its scale and impact, particularly with innovations like Aadhaar and UPI that transformed identity verification and payments. Riding on the success of these initiatives, the launch of the Open Network for Digital Commerce (ONDC) was seen as India’s next big leap—this time into the complex and high-stakes world of e-commerce. The idea was radical: to democratize online commerce by dismantling the monopolistic control of tech giants like Amazon, Flipkart, and Meesho, and replace it with an open, interoperable digital framework that empowers small businesses, local sellers, and regional logistics providers.

However, while the concept gained immediate traction and policy-level backing, ONDC’s real-world implementation has been fraught with challenges. Despite crossing 700,000 registered sellers, the platform is now showing signs of fatigue. Order volumes are stagnating or even declining in some verticals. Consumer feedback has been uneven, with many complaining about poor user experience, delayed deliveries, and inconsistent product information. More worryingly, several major service providers—particularly logistics players and buyer-side apps—have either reduced their activity on the network or exited entirely. These developments raise an important and uncomfortable question: Is ONDC India’s UPI moment for e-commerce, or is it becoming a cautionary tale of overestimating the power of digital frameworks in complex physical markets?

To understand ONDC’s current standing, we must first revisit its core design. Unlike traditional e-commerce platforms, which control the entire stack—from product listing to delivery—ONDC unbundles each function. It allows different participants to plug in at different layers, such as cataloguing, payment, fulfillment, and customer support. In theory, this decentralization reduces entry barriers, drives competition, and prevents market capture. It’s a brilliant architectural innovation that aligns with India’s broader push toward sovereign digital infrastructure. But the real challenge lies not in the architecture itself—it lies in execution, adoption, and trust.

One of the biggest issues ONDC faces is the lack of demand-side pull. The platform has been largely supply-driven, focusing on onboarding sellers across categories without ensuring corresponding consumer engagement. Unlike UPI, which benefited from aggressive consumer-facing incentives like zero transaction fees and cashback schemes during its rollout phase, ONDC hasn’t generated similar enthusiasm among end users. Without a clear and sustained incentive for consumers to switch from Amazon or Flipkart to a lesser-known ONDC-enabled app, the network is unlikely to gain organic traction. Moreover, existing e-commerce platforms have already optimized their user experience, logistics, and trust mechanisms over the years. For ONDC, replicating even a basic level of seamlessness across a disaggregated set of providers is proving to be an uphill task.

The exit or reduced engagement of key service providers is another critical red flag. Several logistics partners have reported difficulties in managing fulfillment without visibility across the entire customer journey. Since ONDC doesn’t assign accountability to a single entity, when things go wrong—such as failed deliveries, payment disputes, or delayed refunds—users are often left in a limbo. This fragmentation undermines trust, the cornerstone of any successful digital marketplace. Even buyer apps that initially joined ONDC are now reconsidering their role, citing poor unit economics, operational inefficiencies, and limited customer retention. In essence, the open protocol’s idealism clashes with the harsh commercial realities of last-mile service and consumer satisfaction.

Additionally, many MSMEs and small retailers, who are supposed to be the biggest beneficiaries of ONDC, lack the digital infrastructure and literacy to thrive on the network. ONDC does offer training and onboarding support, but the gap between onboarding and meaningful participation remains wide. Sellers often struggle with catalogue management, pricing, and customer communication—areas that large e-commerce platforms usually streamline on behalf of their merchants. Unless ONDC finds a way to provide robust handholding and automation tools at scale, its inclusive vision will remain aspirational.

From a policy perspective, ONDC also suffers from regulatory ambiguity. Who is responsible when an order fails? How are disputes to be resolved in a multi-party transaction? What happens when a buyer claims non-fulfillment, but the seller and logistics provider point fingers at each other? These issues are not just operational—they are structural. Without clear frameworks for grievance redressal, penalties, and refunds, both consumers and service providers will hesitate to fully commit to the ecosystem.

However, this does not mean ONDC is a failed idea. In fact, its very design offers a flexible platform to build solutions iteratively—provided the policymakers, developers, and private players collaborate effectively. Some quick wins can still revive the platform’s fortunes. For one, creating a robust incentive structure for both consumers and sellers can stimulate engagement. Public-private partnerships could help fund these incentives, akin to how UPI was supported by the NPCI and private banks in its early days. Second, ONDC needs a trusted certification or rating system to help consumers distinguish between reliable and poor-performing service providers. Third, an integrated support system—offering AI-powered catalogue tools, logistics optimization, and localized language support—can drastically improve the ease of doing business for small sellers. Finally, clearer regulatory guidelines and defined accountability mechanisms will enhance confidence among all participants.

In conclusion, ONDC is not a policy failure—but it is a live experiment that risks stalling without adaptive governance and rapid response to market feedback. India’s ambition to set a global benchmark in open digital commerce is laudable, but it must acknowledge that e-commerce is not just digital—it is physical, logistical, emotional, and deeply rooted in trust. As ONDC evolves, it must learn from its early missteps, build trust through performance, and co-create value with the very players it seeks to empower. Much like UPI, it needs a nurturing ecosystem, sustained handholding, and credible champions to succeed.

Whether ONDC becomes a global model or remains a bold but incomplete prototype depends on what India does next.