The Open Network for Digital Commerce is considering bringing back subsidies worth Rs 100 to 150 crore to support food delivery companies on its platform. If implemented, this move will help firms like Magicpin, Paytm, Ola Consumer and Waayu offer discounts to customers, potentially driving 80 to 100 million orders for restaurants over time.
This comes as ONDC looks to reverse its earlier decision to stop subsidies, which had led to a drop in overall retail activity across ecommerce, grocery and food delivery. Sources shared that the final amount is still under discussion, with ONDC officials and stakeholders from the restaurant and food delivery sectors holding talks over the past month. These incentives are expected to be introduced gradually.
India’s food delivery market is largely dominated by two players, leading restaurants to explore alternatives due to high commission charges. Platforms like Zomato and Swiggy charge around 18 to 25 percent per order, while ONDC’s commission is lower at 10 to 11 percent and also gives restaurants access to customer data.
The National Restaurant Association of India had earlier urged its members to join ONDC after leading platforms launched 10-minute delivery services, which posed a direct competition to eateries. However, despite ONDC’s entry into the food delivery segment in 2021, it has struggled to gain significant traction. According to a brokerage report, ONDC has not seen meaningful success in this space so far, though the Indian food delivery market is projected to grow from 8 billion dollars in 2023 to 17 to 21 billion dollars by 2028.
Other companies like Rapido are also preparing to launch low-commission food delivery services, adding more options for restaurants looking to reduce costs.
In the last two quarters from October to March, food delivery growth for both Zomato and Swiggy remained below 20 percent, with the April to June quarter estimated to fall further to 15 to 16 percent.
A spokesperson for ONDC stated, “ONDC is working in close collaboration with NRAI under the guidance of DPIIT, Ministry of Commerce and Industry, to enable India’s restaurant and food delivery ecosystem to serve customers more efficiently, transparently, and on their own terms.”
Recent leadership changes at ONDC have also come at a critical time. After its CEO stepped down in April, the chief operating officer took over in an acting capacity. Other senior members also exited the organisation in recent months. Retail orders on ONDC dropped from 6.5 million in October last year to 4.1 million in May this year.
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