One of the major cornerstones of India's current progress has been the rapidly increasing digital economy. Three of the biggest publicly accessible internet platforms worldwide are from India: The biggest network for unique digital identities i.e., Aadhaar, the biggest infrastructure for digital payments i.e., Unified Payments Interface (UPI), and the largest forum for immunizations i.e., Co-Win. Recognizing the promise of the internet, the Indian government established the Open Network for Digital Commerce (ONDC) as a possible rival to Walmart and Amazon.com in the nation's rapidly expanding e-commerce industry.
Did you know?
In comparison to the worldwide average of 64 %, India has the highest adoption rate of fintech at 87 %.
Background of ONDC
Shortly after the first phase of COVID was announced in April 2020, the concept for ONDC was formed and has been actively debated since then. During this period, it was discovered that it was difficult to provide vital supplies beyond confinement zones. Therefore, a shift from scaling what succeeds in e-commerce to scaling what works was deemed necessary.
To democratise e-commerce in India and provide alternatives to commercial e-commerce sites, ONDC was established as a private, non-profit corporation on December 31, 2021.
The Department for Promotion of Industry and Internal Trading of the Quality Council of India served as the incubator for ONDC. A 9-member advisory group gave the government advice on the steps that needed to be taken to develop and hasten the deployment of ONDC.
Meaning of Open-Source Software
A program or piece of software is said to be "open source" if the technique or source code used to create it is publicly accessible for anyone to use, share, and change. As an example, the iOS operating system is closed-source. Conversely, because the Android mobile operating system is open source, smartphone makers may customise it to work with their own hardware.
Also read: Meaning of Business Communication - Types of Business Communication & Why Business Communication Is Important
What is Open Network for Digital Commerce (ONDC)?
ONDC is a non-profit organisation whose network will make it possible for all registered e-commerce portals to have their goods and services shown in search results for all of the platform's applications. A consumer shopping for a Bluetooth headset on Amazon, for instance, would also receive results from Flipkart on the Amazon website if both Amazon and Flipkart integrated their systems with ONDC.
In order to democratise the digital economy, ONDC is a pioneering endeavour on a worldwide scale. Equal opportunities shall be offered by the ONDC to all participants in the market, including customers. It switches from a platform-centric paradigm to an open network, where both the buyer and the vendor must utilise the very same network or application in order to be visible online and conduct business.
It is independent of any particular system and is built on open-sourced approach, employing open standards and open network protocol. It is an impartial platform that, similar to the Unified Payments Interface, would establish open-source standards for vendor matching, pricing discovery, and cataloguing.
Current status of ONDC
Five cities—Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore—have received the ONDC rollout. Currently, the activities are concentrated on supporting real-time transactions for restaurants and retail establishments. Later on, the open network will include more domains like travel and communication.
By October 2022, 100 cities and towns all over India will have ONDC installed, based on the results of the pilot program and once the network has stabilised. The objective is to support 10 million retailers and 30 million sellers online.
Key stakeholders in ONDC
20 public and commercial entities have officially committed ₹ 2.55 billion (US$ 33.34 million) in investments. Banks from both the private and public sectors have increased its stake in ONDC. An estimated 80 businesses are attempting to integrate market participants with the ONDC platform.
Significance of ONDC
It will assist in increasing both the number and value of e-commerce operations. According to government projections, India's e-commerce business would reach US$ 350 billion by the end of just this decade, from a gross merchandise valuation of more than US$ 55 billion in 2021. With ONDC, this goal appears to be much more attainable.
Also read: Perfect Food Truck Business Plan to Start Your Successful Food Truck Business
The government claims that because the current platforms operate in monopolies and are strictly regulated, many smaller businesses are shut out. Over 60% of the e-commerce market is currently under the hands of Amazon and Flipkart. However, by displaying goods and services from all partner e-commerce platforms, ONDC will decrease competition and encourage innovation by start-ups.
Additionally, it will restrict the chances for some merchants to gain special treatment. Major e-commerce enterprises frequently face accusations of giving customers special treatment. Additionally, it will help put a stop to predatory pricing, particularly for high-margin, high-value goods.
Freedom of Choice:
It is anticipated that it would increase consumer exposure to and inclusion in e-commerce. By employing any compatible program or platform, they might possibly find any vendor, item, or service, expanding their range of options.
Cost Savings for Sellers:
Instead of being constrained by certain platform-centric regulations, ONDC would allow small firms to utilise any ONDC-compatible apps. This will offer small companies several alternatives for acquiring the tools they need to operate and be found on the network without being forced to pay aggregator platforms a hefty fee.
Companies are anticipated to gain from clear regulations, easy investment, and cheaper start-up costs. Additionally, it is anticipated that both the duration to market and the time to scale would be significantly shortened. All of these will aid in luring more investment into the e-commerce industry.
Aid in Diplomacy:
A new kind of international diplomacy is starting to take place on the internet platforms. Worldwide attention is focused on India's identification and payment infrastructures. India just made the Co-Win platform available to interested nations.
Also read: What Is Business Development - Complete Guide on Business Development Strategy for Successful Business
It is anticipated that the Indian e-commerce economy would grow to be a $200 billion industry. However, the administration must deal with a number of issues and devise plans to address them. The future is bright for small-to-medium-sized players. Further people will spend more on goods that represent culture and identity, which will lead to more changes in habits and way of life. With the growth of the Indian economy, more of these things must be consumed. Because of this, the retail e-commerce sector will grow as well. Together, these factors will bring an end to digital monopolies within the e-commerce sector.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.