Open Network for Digital Commerce (ONDC)

  • The ONDC project was commissioned by the Department for Promotion of Industry and Internal Trade (DPIIT) through the Quality Council of India (QCI)
  • The ONDC initiative was introduced to promote the use of open networks for all the aspects of trade in goods and services over digital or electronic platforms. 
  • ONDC is developed based on an open-sourced model, using open specifications and open network protocols independent of any specific platform.
  • ONDC is set to digitise the whole value chain, standardise operations, promote inclusion of suppliers, increase efficiency in logistics, and improve value for consumers.
  • The ONDC platform is in the middle of the interfaces which has both buyers and sellers. It connects a buyer who searches for an item on the interface with the sellers who have listed that particular item. 
  • ONDC will have several backend partners such as logistics service providers, enterprise resource planners, e-commerce store hosting service providers, etc.

Aim of ONDC

  1. The project ONDC is mainly aimed at curbing “digital monopolies”.
  2. ONDC, using open specifications and open network protocols independent of any specific platform aims at promoting open networks developed on open sourced methodology.

Implementation of ONDC 

  1. The task of Open Network for Digital Commerce has been assigned to the Quality Council of India (QCI).
  2. ONDC is to integrate e-commerce platforms through a network based on open-source technology.
  3. The Open-sourcing project is likely to be on the lines of Unified Payment Interface – UPI, therefore several operational aspects such as onboarding of sellers, vendor discovery, price discovery, and product cataloging could be made open-source by e-commerce platforms. 

Significance of Open Network for Digital Commerce 

  1. If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes. 
  2. ONDC could give a huge booster shot to smaller online retailers and new entrants.
    • If ONDC is mandated, it could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.

Latest developments

  • With a view to restrict the dominance of U.S. firms such as Amazon and Walmart in the fast-growing e-commerce market, India soft-launched its Open Network for Digital Commerce (ONDC) recently.
  • The Central government believed that the Indian e-commerce market was worth more than $55 billion in gross merchandise value in 2021 and is expected to increase to about $350 billion by 2030.
  • Following the success of its payments business in India because of the Unified Payments Interface (UPI), Google has shown interest in joining the ONDC. 
    • Currently, Google’s shopping business is limited to being an aggregator of listings and doesn’t carry out order fulfilments like delivery, which the companies like Amazon do.

Leave a Reply