Open Network for Digital Commerce (ONDC)

In News

• Recently, the commerce and industry ministry said that it is all set to launch the pilot phase of open network for digital commerce. 

About Open Network for Digital Commerce (ONDC)

• Department/ Ministry: It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.
  • Nandan Nilekani advisory council has been set up to ascertain steps required to design and accelerate adoption of ONDC.
• Meaning: Open Network for Digital Commerce (ONDC) is a network based on open protocol and will enable local commerce across segments, such as mobility, grocery, food order and delivery, hotel booking and travel, among others, to be discovered and engaged by any network-enabled application.
  • The Open Network for Digital Commerce (ONDC) is an initiative of the government to promote an open platform for all aspects of the exchange of goods and services through electronic networks.
  • The ONDC platform lies in the middle of the interfaces hosting the buyers and the sellers.
• Aim: The platform aims to create new opportunities, curb digital monopolies and by supporting micro, small and medium enterprises and small traders and help them get on online platforms.
• It will be launched in five cities: Delhi NCR, Bengaluru, Bhopal, Shillong and Coimbatore.
• Target: So far only bigger players are able to take advantage of e-commerce and small people are still out of it.
• Private sector led non-profit company: ONDC has received its certificate of incorporation as a private sector led non-profit company.
  • A number of established companies are already integrated with ONDC.

Features of ONDC

• UPI of e-commerce: ONDC, a UPI of e-commerce, seeks to democratise digital or electronic commerce, moving it from a platform-centric model to an open-network.
• The platform will also be compliant with the Information Technology Act, 2000 and designed for compliance with the emerging Personal Data Protection Bill.
• ONDC plans to enable sellers and buyers to be digitally visible and transact through an open network, regardless of what platform or application they use.
• It will also empower merchants and consumers by breaking silos to form a single network to drive innovation and scale, transforming all businesses from retail goods, food to mobility.
• The new framework aims at promoting open networks developed on open-sourced methodology.
• It is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers.

Issues with open source technology

• Usability: Some open source software is easy to use, many programmes are created to meet the needs of the developer, without considering usability. This can make open source software difficult to use, especially for those who aren’t tech-savvy.
• Lack of support: This means that if things go wrong, there’s no one specific that you can go to for help.
• Compatibility issues: many computers will need specialist drivers to be able to run open source programmes. These drivers may only be available from the manufacturer of the equipment and the costs can quickly add up.
• Hidden costs: open source software is usually free to acquire, there are many other associated costs involved in using open source software which many people fail to consider before implementation.
• Security risks: As the source code that this type of software is built upon is free to edit, this means that people are able misuse the code.

Potential advantages/ benefits of ONDC

• Dynamic pricing, inventory management and optimisation of delivery cost are the three important things in ONDC which will help reduce the cost of doing business for everybody, including retailers.
• Through this platform, consumers can potentially discover any seller, product or service by using any ONDC-compatible application or platform, thus increasing freedom of choice for consumers.
• Protocols under ONDC would standardise all operations like cataloguing, inventory management, order management and order fulfilment.
• Through ONDC, merchants will be able to save their data to build credit history and reach consumers.
• Other benefits:
  • Access to more buyers.
  • Better discoverability of products and cost.
  • Autonomy on terms because of multiple choices for being digitally visible.
  • Lower cost of doing business.
  • More options for value chain services like logistics and fulfilment.

Way Forward

• The initiative is aimed to democratise digital commerce and move it from platform-centric model to an open-network model.

Source: ET