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Indian government looking to bring in private sector to roll out ONDC on a war footing

The ONDC is supposed to be the government’s response to the growing influence of marketplaces like Amazon and Flipkart.

The Indian government is looking to establish a non-profit company led by the private sector to oversee the implementation of the Open Network for Digital Commerce, according to a press release by the Department for Promotion of Industry and Internal Trade (DPIIT). The decision was taken at a meeting chaired by Piyush Goyal, a cabinet minister who has ministries like Commerce & Industry, Consumer Affairs & Food & Public Distribution, and Textiles in his portfolio. 

The government explained that it is removing the drive for profit maximisation from the equation by keeping the structure of the company as non-profit. The details of how people will be inducted or how the entity will operate are yet to be disclosed.  

The government revealed that a team of experts has been put in place by the Quality Council of India to ensure the execution of the project and that several small and medium enterprises have signed on as volunteers to complement the ONDC team. 

“An ONDC gateway has also been established. About 20 entities covering all network components are at various stages of on-boarding. DPIIT has approved a budget of approximately Rs 10 crores for initial work on the project,” read the statement by DPIIT.

ONDC is supposed to be the government’s response to the growing influence of marketplaces like Amazon and Flipkart which operate as walled gardens. It may have a sweeping effect on the e-commerce landscape if the impact of UPI (Unified Payments Interface) is any indicator.  

What will be the role of this entity? 

The job profile of the non-profit entity will include: 

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  • Develop the network by adopting and building enabling technology 
  • Encourage voluntary participation by ecosystem players on a wide scale.
  • Ensure network discipline by establishing a code of conduct and rules of network based on principles of consumer protection, fair trade and regulatory conformity. 
  • Provide foundational services for managing the network. For example, digital infrastructure for the network, common registry, certification of participants and certifying agencies, grievance redressal, etc. 
  • Operate reference applications for buyers, sellers and gateway for market activation and priming the network along with partner entities. 
  • Support SMEs by developing readymade tools to help existing software applications quickly adapt to the network.

Who was present at the meeting? 

The meeting saw the participation of many stakeholders including the advisory council set up by the Union government.

  • Anurag Jain, Secretary, DPIIT 
  • R.S. Sharma, CEO, National Health Authority 
  • Adil Zainulbhai, Chairman, QCI 
  • Dilip Asbe, MD & CEO, National Payments Corporation of India 
  • Suresh Sethi, MD & CEO, NSDL-e Gov 
  • Kumar Rajagopalan, CEO, RAI, 
  • Arvind Gupta, Founder, MyGov 
  • Anjali Bansal, Founder, Avaana Capital

Senior representatives from State Bank of India, Punjab National Bank, Bank of Baroda, NABARD, SIDBI, National Payments Corporation of India, NSDL, CDSL, NSE and BSE were also present at the meeting.

Will ONDC suffice in curbing marketplace monopolies?

A media roundtable organised by Chase India recently discussed the ONDC in detail. The consensus was that ONDC is a step in the right direction but panelists said that there is a need for the focus to move beyond providing a technical layer.

Focus is limited to technical layer: “It [ONDC] is touted as the UPI of digital commerce. It is the right direction. The problem with ONDC is that it is technical infrastructure. The technical layer would be inadequate for e-commerce and its complexities. It will be easier to have interoperable social media than digital commerce because there are no physical things to exchange and return and assess quality,” Parminder Singh, Executive Director, IT for Change explained. 

Regulation first: “I’m taking this example to say that making standards is easy. Nothing comes of it.  How do you make sure that the players operate along those standards? UPI was easy because finance is a regulated sector. If you have to do it in social media or in commerce, you have to regulate it first,” Singh suggested.

Bringing data and AI into the fold: “Don’t just decentralise network power. There is a network but the power has been superseded by data and AI power. A platform is not just a network, but a repository of data and AI. One needs to add data infrastructures which will support the open networks,” Singh concluded.

An overview of ONDC

The Union government floated ONDC as a digital project in 2020 to set protocols for cataloguing, vendor discovery, price discovery, and standardise the process of onboarding retailers onto e-marketplaces as well as the supply and delivery of products through online channels.

The project was launched in parallel with the amendments to the e-commerce rules. The government set up a steering committee in November last year to formulate, implement, and provide policy oversight on ONDC.

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The Department for Promotion of Industry and Internal Trade (DPIIT) has assigned the work of carrying out a pilot for ONDC to the Quality Council of India. The department also formulated an advisory council for ONDC with nine members in July this year. The members will advise the government on measures needed to design and accelerate the adoption of ONDC.

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