Central idea: The article discusses the Indian government’s plan to launch the Open Network for Digital Commerce (ONDC) to support small retailers and businesses against large tech-based e-commerce firms.

About ONDC

• The ONDC is a private non-profit Section 8 company established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India.
• It aims to develop open e-commerce by creating a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.
• It was incorporated on December 31, 2021, with an initial investment from Quality Council of India and Protean eGov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited).

What exactly is ONDC?

• The ONDC is not an application, an intermediary, or software but a set of specifications.
• The ONDC seeks to provide an open-source platform for digital commerce that will enable small retailers and businesses to compete with large e-commerce firms by providing them with access to a wider customer base and reducing the costs of doing business.

What does one mean by ‘Open-sourcing’?

• Free for all: An open-source project means that anybody is free to use, study, modify and distribute the project for any purpose.
• Open licensing: These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

What processes are expecting to be open-sourced with this project?

• Several operational aspects including onboarding of sellers, vendor discovery, price discovery and product cataloguing could be made open source on the lines of Unified Payments Interface (UPI).
• If mandated, this could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.

What does the DPIIT intend from the project?

• ONDC is expected to-

1. Digitize the entire value chain,
2. Standardize operations,
3. Promote inclusion of suppliers,
4. Derive efficiencies in logistics and
5. Enhance value for stakeholders and consumers

Countering ‘Digital Monopoly’

• Digital monopolies refer to a scenario wherein e-commerce giants or Big Tech companies tend to dominate and flout competition law pertaining to monopoly.
• The Giants have built their own proprietary platforms for operations.
• In March, India moved to shake up digital monopolies in the country’s $ 1+ trillion retail market by making public a draft of a code of conduct — Draft Ecommerce Policy, reported Bloomberg.
• The government sought to help local start-ups and reduce the dominance of giants such as Amazon and Walmart-Flipkart.
• The rules sought to define the cross-border flow of user data after taking into account complaints by small retailers.

Processes in the ONDC

• Sellers will be onboarded through open networks. Other open-source processes will include those such as vendor and price discovery; and product cataloging.
• The format will be similar to the one which is used in the Unified Payments Interface (UPI).
• Mega e-commerce companies have proprietary processes and technology for these operations.
• Marketplaces such as Amazon, Flipkart, Zomato, BigBasket and Grofers will need to register on the ONDC platform to be created by DPIIT and QCI.
• The task of implementing DPIIT’s ONDC project has been assigned to the Quality Council of India (QCI).

Why such a move by the govt?

• This COVID pandemic has made every business to go digital.
• India is a country with 700 million internet users of whom large crunch of population are active buyers on e-coms.
• There are 9 platforms in the world which are billion user platform and all are private. This is the monopoly which the govt aims to hit.
• No country would ever want a few (foreign) companies to control their domestic e-commerce ecosystem.
• Countries like US are struggling to control their monopoly over the e-commerce giants leaving no space for Indian legislations to control these overseas companies.
• In India Amazon, Walmart, Uber are controlling larger crunch of share in the market leaving very less scope for domestic companies to cope up with.

Scope for ONDCs success

• Over last 50 years India is dealing with Big Tech companies with responsibility and pragmatic manner. Now it is also coming with new policies to control them.
• The drafting panel has extraordinary persons like Mr. Nandan Nilekani and others who were in Aadhar, NPCI, MyGov, Retail industry and these make it inclusive and innovative.
• India has successfully executed various public digital platforms like JAM Trinity, Aadhar linked projects. India for sure can handle its digital ecosystem better in e-coms too.
• Open-sourcing will benefit society at large as did the UPI.

Issues that can be raised

• Monopolies: Draft E-Commerce policy can raise resistance from companies like Amazon, Flipkart, and Walmart etc.
• EODB concerns: They may raise hues over operability and ease of doing business.
• Compliance burden: MSMEs have already raised the growing compliance burden for e-commerce.

Other challenges

• Every platform has its own challenges so would the ONDC may have.
• While UPI was ruled out (BHIM being the first) people were reluctant in using it due to transaction failures.
• With subsequent improvements and openness people and businesses are using it in every walks of life. So it would work with ONDC.

Conclusion

• Once adopted, ONDC will make sure consumer and seller interest will be protected as the UPI did.
• Best is yet to come and we are in 4th industrial revolution where the Govt should strengthen itself accordingly and make businesses inclusive and restrict monopolies.

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