ONDC Cuts Incentives For Network Participants By 84%

ONDC has reduced the maximum incentive amount that each network participant can receive by 84%, transitioning from a maximum payout of Rs 2.5 crore per month to a revised limit of Rs 40 lakh.

This financial incentive provided by ONDC is allocated by platforms to subsidize discounts and offers aimed at accelerating the adoption of the government-endorsed network.

This adjustment was implemented approximately two months following ONDC’s announcement of plans to diminish its order level incentives by up to 75%. Industry experts speculate that the significant reduction in incentives observed this month may be strategically designed to allocate funds towards substantial discounts and offers during the festive season, specifically October and November.

Moreover, ONDC has implemented several critical modifications to the incentive scheme in its most recent memorandum, with the objective of preventing the concentration of incentives among a select few large entities.

For a specific order, the total subsidy available to the buyer-side application, the seller-side application, and the logistics platform is now limited to a maximum of Rs 40.

Additionally, a novel clause has been introduced, stipulating that financial assistance will be extended only to orders placed between distinct buyer and seller platforms.

Consequently, an order that originates from the buyer application of a company and is fulfilled by its own seller application is ineligible to receive the incentives.

This announcement precedes the commencement of the annual festival season sales on major e-commerce platforms. The forthcoming e-commerce extravaganza promises to attract customers with a wide array of offerings, including discounts across various product categories such as smartphones, fashion and beauty, consumer electronics, groceries, among others. Notably, Amazon and Flipkart, despite being prominent players in the e-commerce sector, have not been included in the Online National Distribution Centre (ONDC), despite the central government’s encouragement for their participation.

Established in 2021, the ONDC represents an initiative led by the Department for Promotion of Industry and Internal Trade (DPIIT), operating under the Ministry of Commerce & Industry. Its primary objective is to foster open networks for the facilitation of goods and services transactions over digital or electronic networks. It has an online presence in over 611 cities, with a network of 111 participants.