Zero-commission model can raise driver incomes, says ONDC white paper

It reveals how open network models such as zero commission boost inclusive growth and strengthen local economies

Open networks in the mobility sector can redefine India’s urban mobility landscape and boost economic growth by generating additional between Rs 51,000 crore and Rs 67,000 crore annually, boosting driver incomes by approximately 30 per cent and fostering inclusive growth, according to a white paper unveiled by Open Network for Digital Commerce (ONDC).

  The white paper ‘Driving Digital Inclusion—Open Network and New Business Models in Mobility Apps’ reveals how open network models such as zero commission offers a compelling alternative, empowering drivers to retain 100 per cent of their earnings.

  It said this shift could increase a driver’s income by Rs 1.36 lakh annually—approximately 30 per cent higher than current levels. This could add up to Rs 20,475 crore annually for 1.5 million drivers across India.

The ripple effects of this additional income are substantial. Drivers’ households are expected to spend more on better housing, education, healthcare, and nutritious food. This increased spending could stimulate local businesses and generate between Rs 51,000 crore to Rs 67,000 crore annually. 

The white paper unveiled by T Koshy, ONDC’s MD and CEO, offers insights into how open networks and new business models can redefine India’s urban mobility landscape while driving economic growth, boosting driver incomes.

  It also highlights the challenges with traditional aggregator-driven models, where platform commissions impact driver incomes and reduce their capacity to contribute to local economies.

  The paper also underscores the importance of evolving policy frameworks with new models emerging with open networks, such as issuing clarifications for GST that can potentially enhance net tax revenues for the government, with estimates ranging from Rs 54.5 crore to Rs 1,152 crore annually, while promoting broad-based economic growth.

 

The whitepaper also highlights how digitisation can play a crucial role in this transition, offering transparency, accountability, and additional benefits for both drivers and passengers. It underscores how open networks can help reduce compliance burdens, encourage digital adoption, and ensure a fair and inclusive approach that benefits all stakeholders.

 

ONDC believes the insights presented in this whitepaper provide a meaningful framework to support the evolution of urban mobility in India while contributing to a more sustainable and equitable ecosystem.

 

ONDC is a network of over 200 apps, including buyer apps and seller apps. Shoppers can choose from one of the buyer apps to buy their desired products based on the categories of products those apps have enabled. Sellers can choose from one of the seller apps listed on the network. Any buyer on any buyer app can buy from any seller on any seller app.

 

Ride-hailing sector

 

India's online ride-hailing sector has emerged as a crucial pillar of urban mobility, generating significant economic value and employment opportunities. The sector serves a substantial and growing user base, projected to reach 38.06 crore by 2029.

 

By last count in 2024, Uber alone engages well over 10 lakh drivers, and in 2018, Ola had declared working with 25 lakh drivers across two, three and four wheeler vehicles. This extensive driver network caters to a substantial user base. The sector is witnessing a 9.09 per cent growth annually. It’s revenue in 2029 is expected to grow to $11.64 billion from $7.53 billion in 2024.

 

Despite its transformative impact, the current ride-hailing ecosystem presents challenges for drivers and customers. Drivers face low earnings, high platform commissions, and the absence of social security, while customers encounter issues like limitations around public transport integration, underserved tier-2, 3 and 4 cities, cancellations, and inconsistent service quality. These concerns underscore the need for a more equitable, inclusive, and innovative approach to ride-hailing services in India. ONDC’s whitepaper describes ways to address that through open network models and zero-commission SaaS models.

 

Together, these solutions align with India’s broader goals of equitable growth, digital inclusion, and sustainable mobility under the government's vision of Viksit Bharat and Digital India.