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ONDC, The Government of India Launches a New Ecommerce Initiative

ONDC, Open Network for Digital Commerce, is a network based on an open protocol launched by the Indian government. It will help allow local commerce segments, including mobility, grocery delivery, food delivery, hotel booking, and others, to engage with customers on any app enabled by the network.

The platform aims to build new opportunities, tackle monopolies, and offer support to MSME and small traders so they can build their online presence. ONDC is an initiative of the DPIIT, Department of Promotion of Industry and Internal Trade under the Ministery of Commerce and Industry.

ONDC Features

ONDC, called a UPI of ecommerce, seeks to democratize electronic or digital ecommerce.

It would move ecommerce from a platform-centric model to an open network. Meaning, that merchants would be able to save their data via ONDC and use it to build their credit history. Businesses could also use it to reach their customers.

The proposed platform, backed by the government of India, aims to build a level playing field between ecommerce giants in India like Amazon, Flipkart, and offline traders who have been crying foul at the unfair trade practices of these giants. Read More

The platform is also in compliance with the IT Act 2000 and the emerging Personal Data Protection Bill.

In this system, ONDC seeks to allow buyers and sellers to be visible on a digital medium and complete transactions via an open network regardless of what application or platform they use. It will empower consumers and merchants by breaking silos to form a single network. These features would also drive innovation expansion, transforming all businesses from mobility to food and retail goods.

The new framework focuses on promoting open networks built using open-source techniques, open specifications, and open network protocols that are platform agnostic.

Also, it intends to digitize the entire value chain, standardize processes, boost supplier inclusion, improve logistics efficiency, and increase consumer value.

According to the government’s official statement, ONDC would take all necessary steps to guarantee the network’s data’s confidentiality and privacy. Participants will not be required to share transaction-level data with ONDC. Will collaborate with participants to disseminate anonymous aggregate network performance metrics while maintaining confidentiality and privacy.

The government has formed a nine-member advisory board, which includes Nandan Nilekani of Infosys and National Health Authority CEO R S Sharma, to design and speed the deployment of ONDC, which is now in its experimental stage.

The Significance

The ONDC had a soft launch on April 29 in five cities throughout India, including the Delhi National Capital Region, Bhopal, Bengaluru, Shillong, and Coimbatore. Consumers may now find any seller, product, or service via any compatible app or platform, giving them a true choice.

When the ONDC is fully implemented and regulated, planned in August 2022, all e-commerce enterprises in India will be required to follow the same standards similar to the same processes as Android-based mobile devices, regardless of brand.

Large e-commerce companies have resisted, claiming that they have already spent a significant amount of money on R&D and the deployment of their processes and technologies (Flipkart, owned by Walmart and Amazon, has invested a cumulative 24 billion USD in capturing 80% of the Indian market). Nonetheless, the government is likely to view India’s e-commerce market worth – predicted by Statista to reach US$200 billion by 2027 – as big enough to attract and involve all types of business competitors.

Online retail currently accounts for around 6% of India’s overall retail sector, but traditional retailers and merchants know how quickly this could change, with over 800 million smartphone users.