Open Network for Digital Commerce (ONDC) is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry. It is a network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others, to be discovered and engaged by any network-enabled application.
Also known as UPI for e-commerce, ONDC seeks to democratise digital commerce and curb digital monopolies by allowing micro, small and medium enterprises and small traders to get them on online platforms.
ONDC is being seen as a way to challenge dominance of large e-commerce platforms in India by enabling offline retail traders to be visible and transact online through an open network, regardless of what platform or application they use. It thus aims at creating levelling field for e-commerce giants such as Amazon and Flipkart as well as local offline retailers.
For example, Amazon, Flipkart and a local electronic retailer in Nagpur are registered with ONDC, a user searching for a Bluetooth headset will see results from Amazon, Flipkart and local electronic retailer. In this way ONDC will provide exposure to local offline retailers as well as consumers. A customer sitting in Nagpur will have options for ordering from local retailer. ONDC aims to go beyond retail e-commerce, however, and similarly connect companies in areas such as mobility, food delivery, hotel booking and travel, among others.
ONDC is presently at pilot stage and is launched as a test in Bengaluru and four other cities. Government has set up a nine-member advisory council, including Nandan Nilekani from Infosys and National Health Authority CEO R S Sharma, on measures needed to design and accelerate the adoption of ONDC. It aims to reach 100 locations across the country by August and expects to sign up 900 million buyers and 1.2 million sellers on the shared network, with a gross merchandise value of $48 billion within next five years.
So far, Ekart and Dunzo have partnered with ONDC to provide logistics support. Paytm has been integrated with the system whereas PhonePe is in advanced stages of integration. Tech-Giant Google is also exploring ways to partner with the initiative.
One of the biggest challenges in the implementation of ONDC at grassroot level is lack of digital literacy and tech expertise among the small business owners. A successful implementation of ONDC necessitates a large-scale awareness drive and digital literacy initiative by government especially in remote and rural area.