ONDC poised to democratise e-com, generate $250-300 bn in GMV: Redseer

With the Indian internet economy projected to reach $1 trillion by 2030, DPIs (digital public infrastructure) are primed to continue playing a significant role in democratising this growth and ensuring a digital future that is inclusive and expansive, according to a report by consulting firm Redseer Strategy Consultants.

For instance, as the next wave of transformation looms, ONDC (Open Network for Digital Commerce) stands out as a potential disruptor, poised to democratize e-commerce across sectors and potentially generate $250-300 billion in GMV (gross merchandise value) by 2030, according to the report. The report was released during the Redseer’s ‘Ground Zero 9.0, Resilience in Action’ event here.

Anticipating the future, Redseer expects the next wave of DPI-driven opportunities in retail, insurance, healthcare, and agritech. Startups will also combine different DPIs in innovative ways to create totally new offerings or fundamentally improve existing offerings in terms of costs, speed, and experience.

Nandan Nilekani, chairman and co-founder, of Infosys, and founding chairman UIDAI (Aadhaar), said the report highlights the synergistic relationship between the startup ecosystem and the DPI. It provides a measure of the economic impact and benefits of mature DPIs across different startup sectors, and the disruption potential of emerging DPIs like ONDC going forward.

“This symbiotic relationship will be critical to drive adoption of digital services across all facets of society, drive more equitable opportunities for all and play a critical role in propelling India to a $10 trillion economy,” said Nilekani.

Over the past several years, India has embarked on a remarkable journey towards becoming a digitally enabled society. At the heart of this transformation, according to the Redseer report, lies the concept of DPI, a strategic framework that has provided the rails to propel India onto the global stage as a digital powerhouse. This has been accelerated by increased access to smartphones and highly affordable mobile data that benefitted nearly 800 million people.

DPIs have not only transformed governance but have also ushered in a plethora of new opportunities for the private sector including startups. This report specifically endeavours to highlight the synergistic relationship of DPIs with the Indian startup ecosystem.

Startups have been among the early adopters of the ‘digital’ and ‘public’ nature of DPIs and leveraged it to create innovative services and process changes to lower costs and expand the reach of their services to all corners of the country.

The speed of DPI adoption has helped them scale rapidly and, in many cases, upstage traditional players in their sectors. Redseer’s analyses reveal that DPIs have helped unlock value of over $100 billion in Indian startups across sectors.

“While the role of DPIs in governance is well understood, DPIs have also had a transformative impact on the Indian startup ecosystem and created tremendous value for the startups, employees, consumers, and funds,” said Nilekani. “The democratized digital ecosystem enabled by DPIs has fuelled market innovation and the number of startups in India has surged over 100x from 2016 to 2023, capitalizing on these open frameworks to generate business value.”

Redseer said Aadhaar was the linchpin for this digital evolution and facilitated easy digital verification at population scale for a range of services through eKYC. Aadhaar’s impact on effective governance has been remarkable and resulted in substantial government savings by plugging the leakages in the system

The next game-changer was the Unified Payments Interface (UPI). UPI democratized digital payments at a speed and scale that was unimaginable even 10 years back. This led to the rapid digitization of small businesses and mass proliferation of online payment among consumers.

The stupendous success of Aadhaar and UPI has spurred the launch of several DPIs at different stages of development. These include Digilocker, Fastag, ONDC, AA, and Diksha, amongst others.

Nilekani said that Aadhaar, eKYC, and UPI lie at the heart of transforming India across all developmental and economic fronts by not only extending access to governance, banking, mobile internet, and commerce to all, but also creating jobs, and attracting capital. “In doing this, India achieved in 9 years what would have taken 47 years by traditional means,” he said in the report.

The Redseer report said that UPI has been the ‘reason for being’ for several large-scale payment platforms with hundreds of million users. eKYC and UPI have democratized financial investments enabling customers from the remotest parts of the country to securely invest in financial assets.

They have also transformed lending to the masses by easier access to and lower costs of loans through digital channels driving a surge in small-ticket loans. As the landscape evolves, the launch of credit on UPI promises even easier access to credit for a large user base, fostering the development of innovative financial products.

Beyond finance, UPI and eKYC have played pivotal roles in propelling all sectors that require customer verification, digital payments, or subscriptions. These include the OTT audio and video platforms, online gaming, e-commerce, and other subscription economy-driven businesses.