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Open Network Digital Commerce (ONDC)

Posted on March 22, 2022 by admin1  524

In News 

  • The Minister of Commerce and Industry said that Open Network for Digital Commerce (ONDC) would democratise e-commerce and will protect small businesses by granting them equal opportunity.

About Open Network for Digital Commerce (ONDC)

  • It 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 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 is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.

Features of ONDC

  • Democratises Digital Commerce
    • It is a globally first-of-its-kind initiative that aims to democratise Digital Commerce, moving it from a platform-centric model to an open-network.
    • It will enable buyers and sellers to be digitally visible and transact through an open network. no matter what platform/application they use.
    • It will 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
  • Compliant with  IT Act 
    • It will also be compliant with the Information Technology Act, 2000 and designed for compliance with the emerging Personal Data Protection Bill.
  • Modelled around UPI
    • It is modelled around the Unified Payments Interface (UPI) project that is seen as a success by many. 
      • The UPI project allows people to send or receive money irrespective of the payment platforms on which they are registered. 
        • Similarly, ONDC will ensure that buyers and sellers in the e-commerce market transact regardless of the platforms on which they are registered. 
        • Thus,a buyer registered on Amazon, may directly purchase goods from a seller who sells on Flipkart.
  • Workable option 
    • ONDC should evolve over time as a self-sustaining entity generating income for its operations and surplus for continuous investment in technology, processes and network development. 
      • This is a very workable option considering the significant benefits it will extend to the ecosystem players.
  • Confidentiality 
    • It shall take all measures to ensure confidentiality and privacy of data in the network. 
    • It shall not mandate sharing of any transaction-level data by participants with ONDC. 

Significance 

  • The e-commerce market in India is expected to touch $5.5 billion in market size by 2025, up from $700 million now.
  • It  aims to drive more innovation by including a wide range of players within its ambit
  • It seeks to control digital monopolies and create more inclusiveness within the digital commerce ecosystem. 
  • It aims to create a level playing field for e-commerce behemoths such as Amazon, Flipkart, and offline traders who have been crying foul at the unfair trade practices of these e-tailers. 
  • It aims at promoting open networks developed on open sourced methodology, using open specifications and open network protocols independent of any specific platform. 
  • It will also enable many small, medium and micro enterprises to get on to the digital bandwagon.
  • It is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers.

E-Commerce

  • E-commerce in recent times has been growing rapidly across the world. 
  • It is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. 
  • Electronic commerce operates in all four of the major market segments:
    • Business to business
    • Business to consumer
    • Consumer to consumer 
    • Consumer to business.
  • In India, there are three  types of e-commerce business models in vogue:
    • Inventory base model of e-commerce 
    • Marketplace base model of e-commerce 
    • Hybrid model of inventory based and market place model.
  • Indian Information Technology (IT) Act gives legal recognition to electronics records and electronic signatures. 
    • These are the foremost steps to facilitate paper less trading. Under this Act the Ministry of Electronics & Information Technology also has Information Technology Rule, 2000 for Reasonable security practices and procedures and sensitive personal data or information. Under section 72A of IT Amendment Act, 2008, punishment for disclosure of information in breach of a lawful contract is laid down.
    • FDI guidelines for e-commerce by DIPP: 
      • DIPP has issued guidelines for FDI in e-commerce. 
      • In India 100% FDI is permitted in B2B e-commerce, however No FDI was permitted in B2C e-commerce earlier.
        •  As per these new guidelines on FDI in e-commerce, 100% FDI under automatic route is permitted in the marketplace model of e-commerce, while FDI is not permitted in the inventory based model of e-commerce .
    • E-commerce has become an important part of many multilateral negotiations such as Regional Comprehensive Economic Partnership (RCEP), WTO, BRICS etc. 
    • The Ministry of Electronics & Information Technology is spearheading such negotiations on e-commerce from the Indian side. 

Source:PIB

 
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