ONDC extends financial incentives through September as retail orders continue to decline

Logistics partners are supported with incentives like Rs 5,00,000 for delivering at least 1 FIFO (First In First Out) order by 30 September 2025 and reach 1,000 FIFO orders within two months of the first order. This is aimed at lowering delivery costs and improving service reliability.

The total incentives for all the schemes are capped at Rs 40 lakhs per network participant for both logistics and retail.

“ONDC is still in a network-building phase. These subsidies are necessary to keep both supply and demand engaged. Without them, retail volumes would fall even faster,” said an industry source requesting anonymity.

This cash incentive from ONDC is used by platforms to fund discounts and offers for customers to promote rapid adoption of the government-backed network

Sources also told Moneycontrol that the planned network fee levy has not yet been implemented.

The proposed Rs 1.5 per order network fee was expected to go live starting 1st, but it is still not implemented, multiple seller network participants that Moneycontrol spoke to said.

“If the fee had been enforced from July, it would have increased costs across categories. By deferring, ONDC has given breathing space for sellers and mobility players to stabilise volumes,” said a person familiar with the development.

ONDC did not respond to Moneycontrol’s queries till the time of publishing the story. The copy will be updated with comments later.

Retail orders continue to slide

According to the company's open data reviewed by Moneycontrol, ONDC clocked 17.94 million transactions in August 2025, up 2.7 percent from July. Mobility and logistics drove the increase with 11.81 million rides and 2.35 million logistics orders.

Retail, however, remained weak at 3.76 million transactions, down sharply from 6.1 million in August 2024.

ONDC categorises its transactions into three buckets: retail, logistics, and mobility. While retail includes food, fashion, and electronics orders placed via buyer apps, logistics refers largely to delivery fulfillment, and mobility includes ride-hailing and public transit ticketing.

Given that retail was once ONDC’s primary growth engine, its steady decline marks a sharp reversal.

In fact, retail orders dipped to a twelve-month low of 4 million in May.  Other than a marginal uptick in March, the category has been sliding steadily since October 2024.

ONDC’s incentives

While ONDC has capped the total financial incentives to Rs 40 lakhs, the network has been gradually decreasing the incentives.
Since August 2024, ONDC has steadily reduced its payouts to network participants, except for a brief festive-season spike in October.

In fact, many industry sources said that part of the cooling demand across categories like D2C and retails can also be traced to shrinking platform incentives.

Mobility soars

In August 2024, the category accounted for less than 40 percent of ONDC’s transactions; a year later, it makes up two-thirds.

Apps like Namma Yatri (Bengaluru, Delhi), Yaary (Hyderabad), and Kerala Open Mobility Network (KOMN) have attracted lakhs of drivers with a zero-commission model made viable by ONDC’s open protocols and fee waivers.

Larger players such as Redbus have also plugged into the network, enabling auto-rickshaw bookings and metro ticketing in multiple cities.

Retail, by contrast, has failed to sustain consumer engagement.

“ONDC’s open framework allows any seller to list products, but issues with cataloguing, inconsistent delivery timelines, and patchy customer experience have dented confidence,”a network participant told Moneycontrol.