Open Network for Digital Commerce Assignment

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An Introduction: Open Network for Digital Commerce (ONDC)

  • Open Network for Digital Commerce (ONDC) is an initiative of Department for Promotion of Industry and Internal Trade (DPIIT, Ministry of Commerce and Industry aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.
  • The foundations of ONDC are to be open protocols for all aspects in the entire chain of activities in exchange of goods and services, similar to hypertext transfer protocol for information exchange over internet, simple mail transfer protocol for exchange of emails and unified payments interface for payments.
  • These open protocols would be used for establishing public digital infrastructure in the form of open registries and open network gateways to enable exchange of information between providers and consumers. Providers and consumers would be able to use any compatible application of their choice for exchange of information and carrying out transactions over ONDC
  • Any seller from any seller platform can be discoverable by any buyer from any buyer platform in ONDC network. Therefore, in this case the enablers are not scale or captive buyer or sellers of the platforms. This means eventually the market may evolve towards most sellers of products or service digitally offering their catalogue onto the ONDC network directly or through aggregators thus being a part of the digital commerce.
  • The ONDC model enables any buyer application to discover any seller. Thus, broader participation of buyer platforms is a key element of the ONDC strategy as an enabler for diverse sellers and seller platforms to proliferate.
  • Thus, ONDC goes beyond the current platform-centric digital commerce model where the buyer and seller have to use the same platform or application to be digitally visible and do a business transaction.
  • ONDC protocols would standardize operations like cataloguing, inventory management, order management and order fulfillment. Thus, small businesses would be able to use any ONDC compatible applications instead of being governed by specific platform centric.
  • policies. This will provide multiple options to small businesses, traders, MSMEs, artisans, handicraftsmen, farmers etc. to be discoverable over network and conduct business. It would also encourage easy adoption of digital means by those currently not on digital commerce networks.
  • ONDC has been institutionalized as a private sector led non-profit company as such an entity is expected to provide a start-up mindset for a population scale implementation, enabled by a management with a futuristic vision, leadership with a deep understanding of commerce, comfort with cutting edge technology, and missionary outlook to drive change. Moreover, a non-profit company structure removes any incentive for owners to drive for profit maximization, keep focus on ethical and responsible behavior while providing for trust. rigorous norms of governance, accountability and transparency.
  • The role of the entity is to develop a network by adopting and building an enabling technology and encouraging wide-scale voluntary participation by eco-system players. It would ensure network discipline by establishing a code of conduct and rules of network based on principles of consumer protection, fair trade and regulatory conformity.
  • The entity will also provide foundational services for managing the network like digital infrastructure for the network, common registry, certification of participants and certifying agencies, grievance redressal, etc. The entity will develop and operate reference applications for buyers, sellers and gateway for market activation and priming the network along with partner entities. It will also support SMEs in their digital transformation by developing readymade tools to help existing software applications quickly adapt to the network.
  • ONDC has been incorporated as a Section-8 not for Profit Company on 30.12.2021.
  • ONDC launched alpha testing in 5 cities ie. Delhi, Bengaluru, Shillong, Coimbatore and Bhopal on 29.04.2022. At present, ONDC is alpha testing with 8 Network Participants-1 Buyer Side App. 5 Seller Side Apps and 2 Logistics Side Apps. Currently, more than 240 sellers and 1300 users are engaged in alpha testing the network across 65 cities in various states.

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