Government’s Open Network for Digital Commerce: An audacious idea

Source: This post is created based on the article “government’s Open Network for Digital Commerce: An audacious idea”, published in Indian Express on 17^th May 2023.

Syllabus Topic: GS Paper 3, Changes to Industrial policies

E-commerce is not simply selling goods and services online; it also includes the physical process of shipping and delivering the ordered items to the customers.

The platforms such as Amazon and Flipkart also function as “operators” as opposed to mere online “platforms”. These platforms are not just bridging the gap between sellers and buyers, but also ensuring the physical completion of transactions.

Therefore, the success of Open Network for Digital Commerce (ONDC) as well, depends on its ability to provide end-to-end solutions from logistics and warehousing to delivery and payments.

What are the aims of ONDC, as an alternative to existing online platforms?

ONDC aspires to displace the prevalent ‘platform-centric’ model with an ‘open network’ model that relies on non-proprietary protocols.

This model allows sellers and buyers to engage in transactions independently and switch among platforms that are compatible with each other.

It will integrate approximately 13 million small local stores and 42.5 million Micro, Small, and Medium Enterprises (MSMEs), which are presently digitally marginalized.

The potential of the ONDC’s success lies in widespread adoption of internet and smartphones in the last decade. Also, the effective implementation of large-scale initiatives like Aadhaar, the Unified Payment Interface (UPI), Goods and Services Tax Network, and CoWin vaccination apps.

What are the challenges in front of ONDC?

First, in UPI, the transactions are limited to transfer of funds between bank accounts that are linked to mobile phone numbers.

Second, ONDC faces a challenge in its ability to physically fulfill orders.

Third, as Union Commerce and Industry Minister Piyush Goyal said that ONDC will have to do better than present platforms or even what UPI did in payments.