ONDC to help digital commerce grow fivefold by 2030: McKinsey & Company

The value of digital commerce across segments in India is projected to rise to $320-340 billion by 2030, marking a fivefold increase from $60-70 billion in 2022, due in large part to the Open Network for Digital Commerce (ONDC), a government-sponsored platform that launched in 2022 and connects buyers and sellers online. 

The projection was made in a McKinsey & Company study released a few days ago. Digital commerce in fashion and lifestyle is projected to rise from $11-13 billion in 2022 to $80-82 billion in 2030, according to the study.

  Digital commerce in electronics and durables is expected to grow three times from $24-26 billion in 2022 to $70-72 billion in 2030.

  The grocery sector is expected to grow an average 11 times from $4-5 billion in 2022 to $50-55 billion in 2030.

  These categories are expected to account for 62 per cent of total digital commerce in 2030.

  In services, food, and beverages, growing consumption through ONDC is projected to go up five-six times hitting $30-32 billion by 2030.

  The entertainment segment (including gaming, over-the-top services, film, and television) is projected to grow six times hitting $17-19 billion.

  McKinsey projected digital consumption in hospitality to grow two-and-half-times between 2022 and 2030.

  Digital consumption in pharmaceuticals is expected to grow eight to 10 times and other retail segments (books and general merchandise) by six to seven times.

  The McKinsey study stated that the growth would be because of a vibrant digital economy. The number of smartphones in the country crossed 1 billion in 2024, the number of internet users is expected to surpass 900 million in 2025, and the number of digitally-connected consumers made up 40 per cent of global internet transactions, according to the McKinsey study.

  The research pointed out that India has drawn interest as a business hub across the globe. Between 2021 and 2023, 984 international companies registered to operate in India, up from 320 between 2019 and 2021.

  There are over 1,500 global capability centres in India with 250 added in the past three-five years, according to the study.

India, the study said, has had many things going for it. With 1.4 billion residents, India has surpassed China as the world’s most populous nation, the study pointed out.

  It stated that average spending power of Indians had gone up from $271 in 2012 to $705 in 2023, and that the nation has developed a more pro-business approach in addition to its historically low labour costs and being home to one-third of the world’s science, technology, engineering, and mathematics graduates.

  The study, however, cautioned that even though spending power has increased, 95 per cent consumers have less than $2,000 in financial assets putting many expensive products out of their reach.

  Further, companies take a long time for payoffs because it takes time to build operations and overcome challenges. There has also been an overdependence on government spending especially over the past five years, the study said.