ONDC

ONDC

Subject : Economy

Context-

• The Open Network for Digital Commerce (ONDC), which is a government- backed project aimed at enabling small merchants and mom-and-pop stores in parts of the country to access processes and technologies that are typically deployed by large e-commerce platforms, is expected to extend beta testing in Delhi after having commenced services in Bengaluru.

What is ONDC?

• It is an initiative aimed at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks.
• ONDC is a freely accessible government-backed platform that aims to democratisee-commerce by moving it from a platform-centric model to an open network for buying and selling of goods and services.
  • Under ONDC, it is envisaged that a buyer registered on one participating e-commerce site (for example, Amazon) may purchase goods from a seller on another participating e-commerce site (for example, Flipkart).
  • Presently, buyers and sellers have to be on the same app for a transaction which happens through the same platform. For example, a buyer needs to go to Amazon, to buy a product from a seller on Amazon.
• It is a not-for-profit organisation that will offer a network to enable local digital commerce stores across industries to be discovered and engaged by any network-enabled applications.
• The open network concept extends beyond the retail sector, to any digital commerce domains including wholesale, mobility, food delivery, logistics, travel, urban services, etc.
• It is neither an aggregator application nor a hosting platform, and all existing digital commerce applications and platforms can voluntarily choose to adopt and be a part of the ONDC network.
• ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.
• It is being developed as a counter to the current stranglehold of two big players in the Indian e-commerce market, which is largely dictated by Amazon and Walmart- owned Flipkart.
• In May this year, the Department for Promotion of Industry and Internal Trade went live with a test run of ONDC in cities like Delhi-NCR, Bengaluru, Coimbatore, Bhopal, and Shillong where it plans to onboard 150 sellers.
• On September 30, the services launched across 16 pin codes in Bengaluru.

How does ONDC work?

• The ONDC platform lies in the middle of the interfaces hosting the buyers and the sellers.
• So far, the buyer side interface is being hosted by Paytm, and the seller side interface is being hosted by other players like GoFrugal, etc.
• When a buyer searches for an item on the Paytm app, from where ONDC has gone live, the app will connect to the ONDC platform, which will connect it to seller side interfaces.

Implementing authority-

• 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.
• The project to integrate e-commerce platforms through a network based on open-source technology has been tasked to the Quality Council of India.