Companies
ONDC targets GeM and PLI beneficiary business for growth
Summary
- Network sees interest from media, gaming and spirituality, aims to grow three-fold
New Delhi/Mumbai: Open Network for Digital Commerce or ONDC has firmed up plans to tap into small and medium enterprises (SMEs) by targeting businesses at the government e-marketplace (GeM) and the beneficiaries of various production-linked incentive (PLI) schemes, two officials aware of the matter said.
According to T. Koshy, managing director of ONDC, the organisation is also working on a plan to triple its business. The company saw more than 12.5 million transactions per month as on date, and wants to take that up to 30-40 million by the end of FY25. “This will come from onboarding small and medium enterprises with products that can be catalogued," Koshy added.
According to Koshy, the breadth of enterprises coming on board is expanding with a lot of philanthropic organisations and CSR foundations also assisting small and micro entrepreneurs to sell on the platform.
Further, there is interest from diverse domains such as media, gaming and spirituality to onboard their ecosystems to the network. “ISKCON enabling purchase of prasad on the network is a case in point with respect to the diversity of the ecosystem possible in ONDC Network," he added. ISKCON refers to International Society for Krishna Consciousness, a spiritual organization.
Also read: After 6-minute loans, ONDC to offer sachetised insurance, micro-investments services
“ONDC’s approach to expand into more cities is helping gain steady momentum. Moreover, the entry of conglomerates is helping boost its consumer base," said Karan Taurani, analyst at Elara Capital. He added, however, that the network is still struggling to scale in a big way owing to the practice of deep discounting as well as “below-par user experience".
Koshy, however, did not comment on the plan to tap into the GeM and PLI beneficiary market.
GeM's growth
One of the two government officials cited above said that ONDC has been asked to tap GeM and PLI beneficiaries. “GeM has registered phenomenal growth and the list of PLI beneficiaries is also expanding, as the scheme has started to yield results," said the official, requesting anonymity.
Taurani is sceptical. “These players will see only modest benefit as ONDC still needs to work hard to improve its user experience, which is unlikely to happen unless it invests heavily in building better technology, last-mile delivery fulfilment and customer acquisition channels," he said.
GeM was launched in 2016 as a one-stop online platform for government buyers to procure goods and services from sellers. It is today the third-largest platform in the world for procurement of goods and services, after Korea's On-Line e-Procurement System (KONEPS) and Singapore's GeBIZ. It has over 63,000 government buyer organizations and more than 6.2 million sellers and service providers.
Also read: Now, get insured, plan your trip, play online games and eat quality food as ONDC expands service base
The platform has added central government ministries as well as states, leading to a big growth in business. In the first quarter of 2024-25, GeM's gross merchandise value (GMV) was ₹1,24,761 crore, which is a 136% year-on-year increase.
Government data shows that GeM's services procurement grew 205% in 2023-24. The order volume that fiscal grew 23.6%, about half of which was from micro and small enterprise (MSE) sellers.
Government officials attribute this increase to engagement from states like Uttar Pradesh, Delhi, and Gujarat.
Look at PLI schemes
Similarly, the production-linked incentive (PLI) scheme was launched after the covid pandemic and is aimed at attracting manufacturing into the country by incentivising local production.
Government estimates show that total projected sales under PLI for 11 schemes to be over ₹35 trillion with domestic sales contributing for about ₹23 trillion.
The ONDC initiative was launched in 2021 with the aim of democratising digital commerce and to break the dominance of major e-commerce platforms.
Prime Minister Narendra Modi, while speaking at the Global FinTech Festival in Mumbai last week, appreciated the fintech sector's contribution to making people's lives easier via products and mentioned ONDC and UPI as two key examples. The PM said India is launching local products, but their applications are global. He reiterated that India's fintech system will help increase the ease of living of the whole world.
Sowmya R. contributed to the story
