The Open Network for Digital Commerce (ONDC) has released a groundbreaking whitepaper titled “Driving Digital Inclusion—Open Network and New Business Models in Mobility Apps.” This report outlines a bold vision for reshaping India’s urban mobility sector, focusing on inclusivity, driver welfare, and customer-centric solutions. The whitepaper highlights the pressing challenges in the current ride-hailing ecosystem, driven by traditional aggregator models. It proposes innovative solutions to create a fairer and more sustainable industry for all stakeholders.

Challenges in the current ride-hailing ecosystem

ONDC's study sheds light on several critical issues affecting drivers and customers alike. Drivers operating under the existing aggregator-based model face substantial financial burdens, primarily due to high commission fees. On average, they earn a gross annual income of ₹4.5 lakh, which is further diminished after accounting for operational expenses. Meanwhile, customers encounter their own set of challenges. Limited integration with public transportation systems, underserved tier-II to tier-IV cities, frequent ride cancellations, and inconsistent service quality are some of the problems plaguing the sector. These limitations hinder not only driver earnings but also broader economic and social development.

Open networks: A path to zero-commission platforms

The whitepaper advocates for open network models, such as Zero Commission Software-as-a-Service (SaaS) platforms, as a transformative approach. Unlike traditional platforms that charge a per-ride commission, these systems operate on a subscription fee basis. By eliminating commission costs, drivers can retain their full earnings, with their annual income potentially rising by 30% to ₹5.86 lakh before expenses. ONDC estimates that for India’s 15 lakh ride-hailing drivers, this model could collectively increase driver incomes by ₹20,475 crore annually.

Economic ripple effects of higher driver incomes

The additional income earned by drivers under the zero-commission model is expected to deliver substantial economic benefits. By spending more on essential areas such as housing, healthcare, education, and nutrition, drivers can stimulate local economies. ONDC projects that this increased spending could generate ₹51,000 crore to ₹67,000 crore annually in additional economic activity. This economic boost would further benefit local businesses and contribute to overall growth and development.

Unlocking opportunities in a growing market

India's ride-hailing market is poised for significant expansion, with over 38 crore users projected by 2029 and expected sector revenue of $11.64 billion. However, the ONDC whitepaper stresses that unlocking the full potential of this growth requires critical policy reforms. Key recommendations include clarifications on GST frameworks, which could improve fairness in the industry while boosting net tax revenues by ₹54.5 crore to ₹1,152 crore annually. This would create a more inclusive and sustainable ecosystem for all stakeholders, from drivers and customers to policymakers.

Driving transparency and accountability through digitisation

The report underscores the transformative power of digitisation in fostering transparency and accountability within the ride-hailing sector. Open networks can simplify compliance processes, promote digital adoption, and ensure benefits for all participants in the ecosystem. By encouraging greater digitisation, ONDC envisions a ride-hailing industry that prioritises driver welfare, enhances customer satisfaction, and fosters long-term economic growth.

A Blueprint for Inclusive Urban Mobility

ONDC’s whitepaper presents a compelling case for transitioning to open network models in India’s ride-hailing sector. By addressing structural issues and implementing innovative solutions, the sector can achieve greater fairness, inclusivity, and economic impact. With the right policy support and widespread adoption of zero-commission platforms, India’s urban mobility landscape can transform into a driver-friendly, customer-centric, and economically vibrant ecosystem.