By Aditi Sood | CORD
India’s digital economy is no longer concentrated in its largest cities. Businesses, lenders, investors and consumers in cities such as Indore, Surat, Coimbatore and Lucknow now take part in digital payments, online lending, e-commerce and cross-regional trade at scale. As this activity grows, so does the need for dispute resolution that is timely, accessible and fair, wherever the parties are located.
Online Dispute Resolution can reduce the cost of distance, travel and physical scheduling. But the real question is not how many disputes can be moved online. It is whether parties in these markets can reach a process they understand, trust and can take part in meaningfully. For some disputes that process will be online. For others it will be a combination of digital and physical steps, or an existing statutory route.
A note on terminology: “Tier-2” is used here broadly to mean cities outside the major metropolitan centres, with reference to the [HRA city classification / other basis. Some cities discussed, such as Tiruppur, would fall below Tier-2 on certain classifications. They are included because of their commercial significance.
Where Disputes Arise Is Changing
India’s ODR ecosystem has developed through several channels: regulator-led frameworks for securities-market and digital-payment disputes, institutional arbitration and mediation, and technology-enabled private dispute resolution. The location of the parties therefore matters more than the location of the institution. A dispute involving a borrower in Indore or a manufacturer in Surat may be administered by an institution based in Delhi, Mumbai or Bengaluru. Measuring regional demand by where institutions are located would miss this entirely.
MSME Disputes and Delayed Payments
Industrial and trading centres such as Surat, Ludhiana, Coimbatore and Tiruppur depend on networks of suppliers, manufacturers, distributors and service providers. Delayed invoices and disputes over delivery or performance can quickly disrupt cash flow.
These enterprises already have a statutory pathway. Under the MSMED Act, 2006, qualifying micro and small enterprises can refer delayed-payment claims to Micro and Small Enterprises Facilitation Councils, which conduct conciliation and, if that fails, arbitration. These proceedings are supported by the MSME Samadhaan platform. Any private ODR offering must complement these routes, not compete with them.
There is still room for institutional mediation and arbitration. Examples include disputes that fall outside the statutory scheme, parties who have agreed to institutional resolution, and commercial relationships both sides want to preserve. The Mediation Act, 2023 expressly recognises online mediation. This gives parties in different cities a legally grounded way to negotiate without travelling.Regional chambers of commerce and industry bodies will be essential partners in understanding which of these disputes are underserved.
Consumer Credit and Financial Services
Growth in digital lending, microfinance and consumer-durable finance in cities such as Indore, Jaipur, Lucknow and Kanpur raises a practical question: how are borrower disputes actually resolved?
Many of these matters involve standardised documentation and recurring issues such as repayment, reconciliation and charges. This makes them structurally suited to efficient, technology-enabled administration. But efficiency does not justify the process, and the legal framework sets real limits:
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Consumer protection. An arbitration clause does not, by itself, displace the jurisdiction of consumer forums over disputes that qualify as consumer disputes (Emaar MGF Land Ltd. v. Aftab Singh, Supreme Court, 2018).
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Regulatory redress. Retail borrowers have access to the Reserve Bank – Integrated Ombudsman Scheme, 2021, for complaints against regulated entities.
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Arbitrability and consent. Arbitration requires a valid agreement and a dispute capable of settlement by arbitration. Not every financial grievance meets that test.
Within these limits, the decisive factor is respondent trust. A borrower who receives a notice from an unfamiliar institution, in a dispute started by the lender, has good reason to ask whether the process is independent.
The law now speaks directly to that concern. In Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019) and the Constitution Bench decision in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2024), the Supreme Court made clear that a party with an interest in the outcome cannot control the appointment of the tribunal. For lender-originated disputes, independent institutional appointment is therefore a legal necessity as well as good practice.
Cross-Regional Commerce
Regional hubs also generate disputes between online sellers, logistics providers and service businesses over delayed payments, delivery obligations and account reconciliation. These disputes often go beyond what customer service can resolve, but do not justify litigation.
Where parties are in different cities, online mediation or conciliation can remove the cost of meeting in person. Arbitration remains available where there is a valid agreement and the dispute is arbitrable.
The Real Constraint: Trust, Not Technology
Digital access enables ODR, but it does not create confidence in the process. A party who receives an online notice may not know the institution, may be unsure what the process involves, or may worry about what happens if they participate, or don’t. Language, legal awareness and digital literacy all shape whether they engage. Above all, institutional credibility depends on neutrality: transparent appointment, procedural safeguards and a real opportunity for every party to be heard.
CORD’s Approach
Markets outside the metros offer a real opportunity to widen access to dispute resolution, but its scale should not be overstated. Public evidence currently shows where economic activity and regulatory pathways exist. It does not show how widely ODR is being used. CORD’s approach is to build that evidence through case-level analysis of where parties are and how they engage, through partnerships with regional industry bodies, and through procedures designed for respondents as much as claimants.
The future of ODR beyond the metros will not be measured by how many disputes go online. It will be measured by whether parties, wherever they are, can reach a fair, credible and effective process for resolving them.
References
- NITI Aayog, Designing the Future of Dispute Resolution: The ODR Policy Plan for India (November 2021).
- Securities and Exchange Board of India, Circular on Online Resolution of Disputes in the Indian Securities Market, SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 (31 July 2023).
- Reserve Bank of India, Online Dispute Resolution (ODR) System for Digital Payments, RBI/2020-21/21, DPSS.CO.PD No.116/02.12.004/2020-21 (6 August 2020).
- Reserve Bank of India, Reserve Bank – Integrated Ombudsman Scheme, 2021.
- Micro, Small and Medium Enterprises Development Act, 2006, ss. 15–18.
- Mediation Act, 2023, s. 30.
- Ministry of Micro, Small and Medium Enterprises, MSME Samadhaan, [URL].
- Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751.
- Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760.
- Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 INSC 857.