Open Network for Digital Commerce

News: The Department for Promotion of Industry and Internal Trade (DPIIT) has issued orders appointing an advisory committee for its Open Network for Digital Commerce (ONDC) project that is aimed at curbing “digital monopolies”.

  • This is in the direction of making e-commerce processes open source, thus creating a platform that can be utilised by all online retailers.
  • Earlier, the Ministry of Consumer Affairs released draft e-commerce rules for consumer protection which seek to bring changes to how e-commerce marketplaces, including Amazon and Flipkart, operate after small businesses complained that they misuse market dominance and deep-discounting to gain an unfair advantage.

What is ONDC Project?

  • ONDC seeks to promote open networks, which are developed using the open-source methodology.
  • The project is aimed at curbing “digital monopolies”. This is a step in the direction of making e-commerce processes open-source, thus creating a platform that can be utilized by all online retailers.
  • They will encourage the usage of standardized open specifications and open network protocols, which are not dependent on any particular platform or customized one.
  • Several operational aspects including onboarding of sellers, vendor discovery, price discovery and product cataloguing could be made open source on the lines of Unified Payments Interface (UPI).
  • If mandated, this could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.

Significance:

  • If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes (like Android Based Mobile Devices).
  • This could give a huge booster shot to smaller online retailers and new entrants.
  • If mandated, this could be problematic for larger e-commerce companies, which have their own processes and technology deployed for these segments of operations.
  • ONDC is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiency in logistics and enhance value for consumers.