What is ONDC, how does it operate, and who is eligible to join?

The Open Network for Digital Commerce (ONDC), which the Indian government founded in April, serves as a rival to Walmart and Amazon in the country’s booming e-commerce business. The most recent information indicates that major players like Flipkart, Reliance Retail, and Amazon intend to join the ambitious Open Network for Digital Commerce e-commerce network (ONDC).

Now, in this article, we’ll go over everything there is to know about the ambitious ONDC platform being developed by the ministry, which aims to transform the e-commerce market just like UPI did for digital banking.

What is ONDC?

The Open Network for Digital Commerce (ONDC) is a network built on open protocol that enables local commerce across segments to be identified and engaged by any network-enabled application, including mobility, groceries, food order and delivery, hotel booking, and travel, among others.

The platform claims to open up new opportunities, breaks digital monopolies, and let micro, small, and medium-sized businesses and independent businesses join online marketplaces. It is a project of the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT).

How does it operate?

  • By converting digital or electronic commerce from a platform-centric model to an open-network, ONDC, a UPI of e-commerce, aims to democratize the industry. Merchants will be able to save their data through ONDC in order to reach customers and establish credit histories.
  • The planned government-backed platform intends to level the playing field for online retail giants like Amazon and Flipkart as well as offline merchants who have been complaining about the unfair business practices of these e-tailers. The platform will also be in compliance with the upcoming Personal Data Protection Bill as well as the Information Technology Act of 2000.
  • The ONDC system will make it possible for buyers and sellers to trade over an open network independent of the platform or application they use. By eliminating barriers and creating a single network to spur innovation and scale, it will also enable businesses across all industries, from retail to food to mobility.
  • The new framework seeks to support open networks created using open standards and open network protocols that are independent of any particular platform.
  • It is anticipated to digitalize the entire value chain, centralize operations, encourage supplier inclusion, increase logistics efficiency, and improve value for customers.
  • The government’s official statement is that ONDC must take all necessary steps to protect the privacy and confidentiality of data in the network. Participants are not required by ONDC to share any transaction-level data with ONDC. Would team up with its users to publish anonymous aggregate metrics on network performance while maintaining privacy and confidentiality.
  • Currently, ONDC is at the pilot stage. To design and hasten the adoption of ONDC, the government has established a nine-member advisory board, which includes Nandan Nilekani from Infosys and R S Sharma, CEO of the National Health Authority.

Where and when will ONDC operate?

Five Indian cities—Bengaluru, New Delhi, Coimbatore, Bhopal, and Shillong—are already participating in the ONDC’s trial program. By August, it hopes to reach about 100 cities and expand to the present five cities. There are only 5 sellers and a small number of buyers participating in the program’s beta testing phase at the moment.

Why is ONDC crucial?

The ONDC will aid in reducing the monopoly of major players and expanding the market for small business owners. Additionally, it will assist in increasing the number of buyers that are accessible to all of the network’s vendors. This manner, the effort will be beneficial to both current and potential customers. According to the government, ONDC will benefit in putting a stop to predatory pricing for high-margin, high-value goods.

What difficulties does ONDC encounter?

The majority of small business owners lack the technical knowledge necessary to participate in this program, so it is necessary to launch a huge awareness campaign. Additionally, small firms face additional challenges to compete with the prices Flipkart and Amazon are offering.

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