Open Network for Digital Commerce (ONDC)

Ministry of Commerce & Industry

Context:

The Union Minister of Commerce & Industry chaired a meeting for the review of the Open Network for Digital Commerce (ONDC) initiative of Department for Promotion of Industry and Internal Trade (DPIIT).

About Open Network for Digital Commerce (ONDC):

Open Network for Digital Commerce christened ONDC is initiative that aims to democratise Digital Commerce, moving it from a platform-centric model to an open-network.

• As UPI is to the digital payment domain, ONDC is to e-commerce in India.
• ONDC will enable, buyers and sellers to be digitally visible and transact through an open network, no matter what platform/application they use.
• ONDC will empower merchants and consumers by breaking silos to form a single network to drive innovation and scale, transforming all businesses from retail goods, food to mobility.
• The ONDC aims at promoting open networks developed on open-sourced methodology, using open specifications and open network protocols, independent on any specific platform.
• The project to integrate e-commerce platforms through a network based on open-source technology has been tasked to the Quality Council of India.
• Implementation of ONDC, which is expected to be on the lines of Unified Payments Interface (UPI) could bring various operational aspects put in place by e-commerce platforms to the same level.
  • Various operational aspects include onboarding of sellers, vendor discovery, price discovery and product cataloguing etc.
• On ONDC, buyers and sellers may transact irrespective of the fact that they are attached to one specific e-commerce portal.
• The project is aimed at curbing “digital monopolies”.
• They will encourage the usage of standardized open specifications and open network protocols, which are not dependent on any particular platform or customized one.

What does Open-Source Means?

An open-source project, software or process means that the process or project is made available freely for others to use, study, modify and distribute it. These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

For example, Apple’s operating system iOS is closed source whereas Google’s Android Operating system is open-source which means Apple’s iOS cannot be legally modified or reverse engineered, but Google’s Android OS can be modified for the hardware of various smartphone companies.  

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:

• If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes (like Android Based Mobile Devices).
• This could give a huge booster shot to smaller online retailers and new entrants.
  • If mandated, this could be problematic for larger e-commerce companies, which have their own processes and technology deployed for these segments of operations.
• ONDC is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiency in logistics and enhance value for consumers.

What is a ‘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.

Government Initiatives Regarding e-Commerce in India:

• Consumer Protection (e-commerce) Rules 2020
  • Consumer Protection Act, 2019

Quality Council of India

• QCI was set up in 1997 by the government of India jointly with Indian industry (represented by CII, FICCI and ASSOCHAM) as an autonomous body under the administrative control of the department.
• QCI establishes and operates the National Accreditation Structure for conformity assessment bodies; providing accreditation in the field of education, health and quality promotion.

Source: PIB

You can find many articles on ECONOMY (part of GS III) in our website. Go through these articles share with your friends and post your views in comment section.