How ONDC Aims To Standardise India's Booming E-commerce Industry

The project aims to curb digital monopoly by creating a platform that can be utilised by all online retailers

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A niche industry up until some years ago, India's e-commerce market is today flourishing like never before. In the last quarter of 2020, the e-commerce order volume in India increased by 36 per cent and the largest beneficiaries were the personal care, beauty and wellness segments, says IBEF report.


To further boost India's digital revolution, the Department for Promotion of Industry and Internal Trade (DPIIT) recently issued orders appointing an advisory committee for its Open Network for Digital Commerce (ONDC) project. The project is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiency in logistics and enhance value for consumers. Overall, it is aimed to curb digital monopoly by creating a platform that can be utilised by all online retailers.

How does it work?

The idea of an ONDC first came up in 2020 in order to standardise and streamline the country's e-commerce industry. When a project is made open-source, it is available for free for others to use and redistribute. Consumers can log in and search for products or services and based on their location they will be able to access a list of sellers, along with product details and price. The platform will support payment gateways and will also offer delivery and logistics services.

Once mandated, sellers will be onboarded through open networks and marketplaces such as Amazon, Flipkart will also be asked to register on the ONDC platform.

The task of implementing the project has been given to the Quality Council of India (QCI), which establishes and operates the National Accreditation Structure for conformity assessment bodies and provides accreditation in education, health and quality promotion.

The advisory council for the same comprises of National Health Authority CEO and former TRAI chairman R.S. Sharma and Infosys non-executive chairman Nandan Nilekani, among others. The council aims at promoting open networks developed on open-sourced methods, leveraging open specifications and open network protocols that are independent of any specific platform.

The benefits

This project eases the operational aspects of running an e-commerce business. For instance, onboarding of sellers, vendor discovery, price discovery and product cataloguing can be made open source. The format will be similar to the Unified Payments Interface (UPI) model.

With this, the government aims to help smaller businesses and reduce the domination of giants such as Amazon and Walmart-Flipkart. "The exploitation of the e-commerce business has reached to an extent that lakhs of shops have been forced to close by unethical business practices of e-tailers in India," said Praveen Khandelwal, the National Secretary-General of the Confederation of All India Traders (CAIT).

Additionally, while this may be beneficial for smaller retailers, if it is mandated, it could be a hitch for larger e-commerce companies who have built their own proprietary platforms for operations since now they have to operate under the same processes.