India’s Department for Promotion of Industry and Internal Trade (DPIIT) has recently formed an advisory board for its Open Network for Digital Commerce (ONDC) endeavour, a project aimed at breaking down “digital monopolies”. The ONDC initiative hopes to flip the e-commerce script by transforming processes into open-source platforms available to all online sellers. This move occurs on the heels of the Ministry of Consumer Affairs drafting new rules for e-commerce that would change how online marketplaces operate, specifically addressing concerns that these companies have been exploiting their market dominance and deep-discounting practices to secure an unequal edge.
ONDC: An Exploration
The ONDC seeks to foster open networks rooted in an open-source approach, utilizing open specifications and open network protocols that aren’t dependent on any specific platform. The Quality Council of India has been tasked with merging e-commerce platforms through a network built upon open-source technology. ONDC implementation, which is projected to align with the Unified Payments Interface (UPI) model, could standardize a range of operational aspects put in place by e-commerce platforms, such as seller onboarding, vendor discovery, price discovery, and product cataloguing. Encouragingly, the ONDC would enable buyers and sellers to conduct transactions without being linked to one particular e-commerce portal.
ONDC’s Implications: Impact on E-commerce
If made mandatory, it suggests that all e-commerce businesses would need to adopt similar procedures, potentially offering a much-needed boost to smaller online retailers and newcomers to the industry. Large e-commerce companies with uniquely developed technologies and processes might find this challenging. The ONDC could also digitalize the entire value chain, streamline operations, encourage supplier inclusion, improve logistical efficiency, and increase consumer value.
Understanding Open-Source
Open-source refers to the process of freely sharing software or process codes, enabling others to use, distribute and modify them. For instance, Google’s Android operating system is an open-source platform, allowing smartphone manufacturers like Samsung, Xiaomi, OnePlus, etc., to adapt it according to their hardware needs. Alternatively, Apple’s iOS, a closed-source system, cannot be legally altered or reverse-engineered.
Government Initiatives Surrounding Indian E-commerce
The Indian government has made several strides towards regulating e-commerce, including the implementation of the Consumer Protection (e-commerce) Rules 2020 and the Consumer Protection Act, 2019. Electronic commerce, or e-commerce, is an online business model that allows companies and individuals to buy and sell goods over the internet. Powered by growing smartphone usage, 4G network rollouts, and rising consumer wealth, India’s e-commerce market is predicted to reach a whopping USD 200 billion by 2026. The Indian e-commerce industry’s growth trajectory positions it to overtake the US and become the world’s second-largest e-commerce market by 2034.
