Which of the following statements about Open Network for Digital Commerce (ONDC) is/are correct? 1. It was launched in 2021 by the Government of India. 2. Its aim is to democratize e-commerce in India. 3. India has surpassed China in 2024 in e-retail penetration. Select the answer using the code given below:

Q: What is the answer to CDS (I) 2025 GK Q112?

B. Correct — B, 1 and 2 only. Take the statements in turn. The Open Network for Digital Commerce was incorporated on 31 December 2021 as a Section 8 not-for-profit company on the initiative of the Department for Promotion of Industry and Internal Trade, with its pilot going live in five cities on 29 April 2022, so statement 1 stands. Statement 2 states the project's own purpose: ONDC applies the protocol idea behind UPI to shopping, so that a buyer on one app can transact with a seller registered on another, breaking the hold of a few closed platforms and letting small sellers reach buyers without joining a marketplace. Statement 3 is the one that fails. India's e-retail penetration — online sales as a share of all retail — is in the single digits, while China's is several times higher; China also has roughly 920 million online shoppers against India's 280 million. What did happen in 2024 is the fact the statement has been bent out of shape: India passed the UNITED STATES to become the second-largest e-retail market by shopper numbers, on a market of about 60 billion dollars. Second largest is not the same claim as highest penetration, and the country overtaken was not China. Since 'statement 2 only' is not offered, the code that fits is (b). (Provisional — pending the official UPSC key.)

(a)1, 2 and 3
(b)1 and 2 only
(c)2 and 3 only
(d)3 only

Answer

Why

Correct — B, 1 and 2 only. Take the statements in turn. The Open Network for Digital Commerce was incorporated on 31 December 2021 as a Section 8 not-for-profit company on the initiative of the Department for Promotion of Industry and Internal Trade, with its pilot going live in five cities on 29 April 2022, so statement 1 stands. Statement 2 states the project's own purpose: ONDC applies the protocol idea behind UPI to shopping, so that a buyer on one app can transact with a seller registered on another, breaking the hold of a few closed platforms and letting small sellers reach buyers without joining a marketplace. Statement 3 is the one that fails. India's e-retail penetration — online sales as a share of all retail — is in the single digits, while China's is several times higher; China also has roughly 920 million online shoppers against India's 280 million. What did happen in 2024 is the fact the statement has been bent out of shape: India passed the UNITED STATES to become the second-largest e-retail market by shopper numbers, on a market of about 60 billion dollars. Second largest is not the same claim as highest penetration, and the country overtaken was not China. Since 'statement 2 only' is not offered, the code that fits is (b).

Why the others are wrong

(a)1, 2 and 3 — Includes the false statement. India has not overtaken China on e-retail penetration; China's online share of retail is several times India's.
(c)2 and 3 only — Drops a true statement and keeps the false one. ONDC was indeed incorporated in December 2021 by the Government of India through DPIIT.
(d)3 only — The weakest code on offer, since it rejects both statements that are correct and accepts the only one that is not.

Concept

ONDC is a network, not an application. It sets open protocols on which buyer-side apps, seller-side apps and logistics providers can all register, so that discovery, ordering and fulfilment are unbundled from any one platform. The comparison usually drawn is with UPI, which made payments interoperable across banks and apps; ONDC attempts the same for commerce. It is run by a Section 8 not-for-profit company incorporated on 31 December 2021, promoted initially by the Quality Council of India and the Protean group and backed by DPIIT.

This is the exact shape in which current-affairs statements go wrong, so it repays study. Statement 3 is not invented from nothing — it is a real 2024 headline with two substitutions. India did reach second place in e-retail in 2024, but by market size and number of shoppers, and the country it passed was the United States. Swap 'second largest market' for 'highest penetration' and 'United States' for 'China' and a true fact becomes a false statement that still feels familiar. When a statement asserts that India has overtaken China on any per-capita or share-of-total measure, treat it as suspect until you can name the figure. Note also the code structure: since statement 3 is false and no 'statement 2 only' option exists, the answer is forced even before you settle the fine print of statement 1.

Key facts

ONDC was incorporated on 31 December 2021 as a Section 8 not-for-profit company on the initiative of DPIIT.
Its pilot went live on 29 April 2022 in New Delhi, Bengaluru, Bhopal, Shillong and Coimbatore.
Its purpose is to unbundle discovery, ordering and fulfilment through open protocols, so buyers and sellers on different apps can transact.
India's e-retail market was about 60 billion dollars in 2024, with penetration in single digits.
India overtook the United States in 2024 to become the second-largest e-retail market, with about 280 million online shoppers; China has about 920 million.

Statement by statement — and what statement 3 was bent out of

1. Launched in 2021 by the Government of India→TRUE. Incorporated 31 December 2021 as a Section 8 company on DPIIT's initiative; pilot live from 29 April 2022.

2. Aim is to democratise e-commerce in India→TRUE. Open protocols let a buyer on one app transact with a seller on another, so small sellers need not join a closed marketplace.

3. India surpassed China in 2024 in e-retail penetration→FALSE. India's penetration is in single digits; China's is several times higher, with about 920 million online shoppers to India's 280 million.

The real 2024 fact behind it→India passed the UNITED STATES in 2024 to become the second-largest e-retail market — by size and shopper count, not by penetration.

Two substitutions turn a true headline into a false statement that still sounds right.

Study next

The Beckn protocol on which ONDC is built, and the wider India StackUPI and the National Payments Corporation of India as the model for interoperabilityIndia's FDI policy for e-commerce — marketplace versus inventory modelsThe Consumer Protection (E-Commerce) Rules and the dark-patterns guidelinesDigital public infrastructure as an export — UPI and ONDC agreements with other countries

Common traps

Accepting any statement that has India overtaking China; check whether the measure is a total or a share.
Reading ONDC as a government shopping app; it is a set of protocols that private apps join.
Dating ONDC to its pilot in 2022 rather than to its incorporation at the end of 2021 — though in this item the code structure makes that argument moot.

As a statements item on what ONDC is and when it began, or in economy sections comparing India's digital public infrastructure with the payments and commerce systems of other countries.

Related PYQs

UPSC_2022_GS1_Q62022Open & attempt →

With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct? 1. They can sell their own goods in addition to offering their platforms as market-places. 2. The degree to which they can own big sellers on their platforms is limited. Select the correct answer using the code given below:

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer(b) 2 only

The policy problem ONDC was built to answer. India's FDI rules already confine foreign-owned platforms to a marketplace role and cap how much of their sales may come from firms they control; the open network attacks the same concentration from the technology side.

Practice

practice — not a real PYQ
ONDC is best described by which one of the following?
- (a)A government-owned online marketplace competing with private platforms
- (b)An open protocol-based network that lets buyer apps and seller apps transact with each other
- (c)A regulator for e-commerce set up under the Consumer Protection Act
- (d)A payments system for cross-border retail trade
Answer(b) An open protocol-based network that lets buyer apps and seller apps transact with each other — it is infrastructure the platforms plug into, not a platform of its own.
practice — not a real PYQ
Which department of the Government of India took the initiative to set up ONDC?
- (a)Department of Consumer Affairs
- (b)Department of Telecommunications
- (c)Department for Promotion of Industry and Internal Trade
- (d)Department of Revenue
Answer(c) Department for Promotion of Industry and Internal Trade — DPIIT, in the Ministry of Commerce and Industry, promoted the network and it was incorporated on 31 December 2021.