How Centre's Open Network for Digital Commerce initiative will boost equitable e-commerce growth

On Tuesday, the Narendra Modi-led government approved a budget of about Rs 10 crore for initial work on the Open Network for Digital Commerce (ONDC) initiative — a not-for-profit online network to check the dominance of e-commerce giants such as Amazon and Flipkart. Union Minister of Commerce and Industry Piyush Goyal reviewed the progress on the ONDC initiative and expressed satisfaction with the progress made and desired to compress timelines for making this network a reality soon. As this work progresses, here’s a better understanding of this platform and how it will help e-commerce in India. E-commerce in India E-commerce in India is booming based, in part, on increased access to the internet in India and the coronavirus pandemic. According to a report by Affle’s MAAS platform and Sensor Tower, India’s e-commerce industry is expected to grow by 84 percent to $111 billion by 2024. The report titled ‘The Dawn of the New-Age Shopper in the New Normal’ noted that India’s spends of Q2FY21 across five popular e-commerce apps stood at over $60 million, more than the combined average spends across Indonesia, Malaysia, Thailand and Vietnam. Moreover, Amazon in its annual report said that 4,152 sellers surpassed Rs 1 crore in sales while the number of ‘crorepati’ sellers grew 29 percent year-on-year (YoY) in 2020. However, Amazon was pipped by arch-rival Walmart-owned Flipkart during the festive season sales this year. According to a Redseer report in November analysing the festive period of mid-October to mid-November 2020, Flipkart had acquired around 66 percent share of the overall gross merchandise value (GMV) worth $8.3 billion while Amazon settled with a 34 percent share. ONDC initiative To explain simply, the ONDC initiative is modelled around the Unified Payments Interface (UPI) project. Just as the UPI project allows people to send or receive money, irrespective of the payment platform, similarly, the ONDC initiative will allow buyers and sellers in the ecommerce market to transact regardless of the platform they are registered to. The project, will effectively, check the dominance of e-commerce giants such as Amazon and Flipkart. The government has set up a nine-member advisory council, including Nandan Nilekani from Infosys and National Health Authority CEO R S Sharma, on steps required to design and accelerate adoption of ONDC. A press release from the government stated: “The entity is expected to provide a start-up mindset for a population scale implementation, enabled by a management with a futuristic vision, leadership with a deep understanding of commerce, comfort with cutting edge technology, and missionary outlook to drive change. A non-profit company structure removes any incentive for owners to drive for profit maximisation, keep focus on ethical and responsible behaviour while providing for trust, rigorous norms of governance, accountability and transparency.” As per the statement, the role of ONDC would be to ensure network discipline by establishing a code of conduct and rules of the network based on principles of consumer protection, fair trade and regulatory conformity. In fact, Minister of State for Commerce Som Prakash on 4 August had informed the MPs in Lok Sabha about ONDC and how it would make e-commerce inclusive and accessible to all. “It will enable the consumers to match demand with the nearest available supply. This will also give consumers the liberty to choose their preferred local businesses,” he had said. With inputs from agencies