An Open Network for Digital Commerce (ONDC) is a network-associated set up by the Union government’s Department for Promotion of Industry and Internal Trade (DPIIT). This open protocol allows local commerce in various segments. In our busy lives, we need such a platform to engage all local commerce and create their e-commerce marketplaces, such as mobility, grocery, and food ordering, by working with various agencies in a single place. It is a non-profit organization that connects and displays products from participating online retailers.
“ONDC can become the next UPI,” says Union IT Minister Ashwini Vaishnaw. “Can we expand ONDC to make it the next UPI? I request that all of you take a serious look at it. We believe that ONDC can be the next UPI.” (Business Standard, Economic Times)
With this platform, the market will get new opportunities and curb digital monopolies by assisting all types of businesses. Although initiated by DPIIT, some people are unaware of it. For this reason, we will help you understand ONDC.
Initially, they partnered with the National Bank for Agriculture and Rural Development (Nabard) to enable e-commerce in agriculture. It’s currently not open to the public and is still in its pilot phase, likely in final testing.
Everything You Need to Know About ONDC
As the name suggests, an “open network” for digital commerce means a chain of different businesses in the same segment. This initiative aims mainly to support various types of businesses in our country. On the other hand, the entire trading industry will be turned into a digital format. Although challenging, if successful, it will boost the economy.
ONDC plans partnerships to develop new solutions: Koshy
“We should have a series of plans to help people make use of this opportunity,” said Koshy. “What we’ve done with Nabard is just a first step. We started with the agriculture sector to help farmers and farmer-producer organizations (FPOs) sell their products on the larger market. We identified nine unique problems that could be digitally solved and organised this hackathon to find smart solutions.”
Essentially, this is a series of activities where ONDC, its investors, and ministries come together to enable MSMEs to take advantage of the opportunity created by ONDC.
ONDC is a type of e-commerce that facilitates digital commerce, transitioning from a platform-centric model to an open network. This allows merchants to keep their customers’ data to build credit history and reduce bad debt. The government proposed ONDC to create a level playing field for other e-commerce giants like Amazon and Flipkart.
The government plans to expand its operations by adding 75 more cities apart from the six cities—Delhi, Bangalore, Bhopal, Coimbatore, Lucknow, and Shillong—by August and to include categories like electronics, garments, home decor, and agriculture products. They also aim to work with CSCs (Common Service Centers), covering 4 lakh villages across India. Currently, over 200 sellers are active in the grocery and food and beverage categories.
“While we started our pilot projects with retail and food, which are difficult last-mile segments, we are now looking to aggressively expand our operations in terms of the number of markets we operate in and the entities logged into the network. Our current goal is to focus on smaller entities such as artisans and small retailers to give them market access,” said T. Koshy, CEO of ONDC (TOI).
Following this, sellers and buyers can be digitally visible and transact through an open network, reducing unfair trade practices. It encourages honest commerce to go digital and enjoy the benefits of digital commerce. Another objective is to standardize operations and increase consumer value. Moreover, ONDC will take different precautions to ensure data confidentiality and privacy.
150 entities, including banks, FMCG, and telcos, are working to express interest. Reportedly, it takes four months to sync with the ONDC protocol. This will give users more choices and the best offers for consumers.
“From six cities and seven companies, ONDC will become a fairly large network in the next six months. The first proof takes time, but once all the testing is done, opening it up to everyone will be straightforward. Right now, think of it as a network in the final testing phase,” said Shireesh Joshi, ONDC’s Chief Business Officer (Financial Express).
The government promised not to disclose any information to third parties. Although ONDC is in the development phase, nine advisory councils have been set up. It includes Nandan Nilekani from Infosys and CEO R. S. Sharma from NHO for taking measures to boost the ONDC establishment.
Conclusively, this is a good initiative to boost the Indian economy by supporting all business types and providing a new interface for the country’s different sellers and buyers. It will be interesting to see when the concept starts to apply and work with the country’s assisted businesses.