Everything to Know: Open Network for Digital Commerce (ONDC)

Recently, Government has decided to incorporate Non Profit Company to develop Open Network for Digital Commerce (ONDC).


Key Points

  • Conceptualised by Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.

  • The task has been assigned to Quality Council of India (QCI).

  • ONDC aims at promoting open networks developed on open sourced methodology.

  • ONDC will be Using open specifications and open network protocols independent of any specific platform.

  • ONDC is expected to democratise digital commerce and digitize the entire value chain, standardize operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers. It will remove monopolistic environments.

What is ONDC

  • The Unified Payment Interface (UPI) has disrupted the digital payments domain. ONDC seeks to achieve something similar for e-commerce. 

  • It aims  to “democratize" digital commerce, moving it away from platform-centric models like Amazon and Flipkart to an open network.

  • ONDC may enable more sellers to be digitally visible. The transactions will be executed through an open network.

  • According to people in the know, the system may empower merchants and consumers by breaking the silos that exist today. It will eventually touch every business, from retail goods and food to mobility.

  • Not only Goods but services will also be included.

How would ONDC work?

  • The ONDC is still work in progress and the details are sketchy. But here is what we know: the network may make it easier for a small retailer to be discovered. Once a retailer lists its products or services using the ONDC’s open protocol, the business can be discovered by consumers on e-commerce platforms that follow the same protocol.

  • Merchants will be able to save their data under ONDC to build credit history and reach consumers.

  • A consumer searching for the product can see the location of the seller and opt to buy from the neighbourhood shop that can deliver faster compared to an e-commerce company. This may promote hyper local delivery of goods such as groceries, directly from sellers to consumers.

Benefits of ONDC

  • Once the ONDC gets implemented and mandated, all e-commerce companies in India will have to operate using the same processes, akin to android-based mobile devices, irrespective of the brand. This would provide a boost to smaller online retailers as well as new entrants by ushering in discoverability, interoperability, and inclusivity.

  • It will empower suppliers and consumers by breaking the monopoly of giant platforms to drive innovation and transform businesses in sectors like retail, food, and mobility.

  • Businesses are expected to benefit from transparent rules, lightweight investment, and lower cost of business acquisition. It is also expected that the time-to-market as well as time-to-scale shall also be substantially reduced.

What Does Open Source Means

  • To make a process or a software open source implies that the technology or code deployed for the process is freely made available for everyone to use, redistribute, and modify. For instance, while the operating system of iOS is closed source (it cannot be legally modified or used), the android operating system is open source, making it possible for Smartphone manufacturers, such as Samsung, Nokia, Xiaomi, etc. to modify it for their hardware

Who will guide the development process?

  • There’s an advisory council which includes R.S. Sharma, chief executive of the National Health Authority; Nandan M. Nilekani, non-executive chairman of Infosys; Adil Zainulbhai, chairman, Quality Council of India; Anjali Bansal, founder and chairperson, Avaana Capital; and Arvind Gupta, co-founder & head, Digital India Foundation, among others.

Source: PIB, Live Mint, Financial Express, other internet sources etc.

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