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Paytm, Phonepe, and Dunzo among 24 startups set to join ONDC

A trial run of the e-commerce project is underway in five cities.

Paytm, Phonepe, Dunzo, and at least 21 e-commerce startups are working on integrating into the Indian government’s Open Network for Digital Commerce (ONDC), according to a Business Standard report.

ONDC launches in five cities: Delhi NCR, Bengaluru, Bhopal, Shillong, and Coimbatore, the Economic Times reported. Real-time transactions in the retail and food delivery space have already started, the report added.

The plan is to onboard three crore sellers and one crore retailers online for ONDC and expand to 100 cities by the time of the official rollout, Anil Agrawal, additional secretary in the Department For Promotion of Industry and Internal Trade (DPIIT), was quoted as saying in the report. This will take six months, said another government official.

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Why it matters: While details about ONDC are being reported, notably, its strategy paper does not elaborate on the privacy and security safeguards that have been put in place for the exchange of data.

Who all are part of ONDC’s trial run: “For the pilot testing, ONDC roped in six Network Participants (NP) who were ready for the world. These include one Buyer App (#PayTM), one Logistics NP, (#LoadShare) five Seller Apps (#SellerApp) GoFrugal (#GOFRUGALTECH), ESamudaay (#esamudaay), GrowthFalcons (#growthfalcons) & DIGIIT(#Digiit),” said the project’s CEO Thampy Koshy on LinkedIn.

What is the ONDC: ONDC is a digital project by the Indian government to develop an open UPI-like architecture for the e-commerce industry. The project was first announced in 2020 and an advisory council was set up in July 2021, but its implementation has picked up considerable pace after ONDC was registered as a Section 8 non-profit company (like the National Payments Corporation of India) on December 31, 2021.

What led to the formation of the ONDC: Small Indian retailers have repeatedly accused Amazon and Flipkart of engaging in preferential treatment to select sellers as well as other anti-competitive practices. A Reuters investigation, based on Amazon India’s internal documents, revealed that the company had given preferential treatment for years to certain sellers on its platform and bypassed Indian laws. Interestingly, ET reported that Amazon and Walmart-backed Flipkart along with Reliance Retail are in talks to also join the ONDC.

How the ONDC is funded: Koshy revealed that the Quality Council of India and Protean eGov Technologies Limited are the initial promoters as of April 29.  There are at least 11 other institutions that have reportedly invested Rs 157.5 crores in the ONDC over March and early April, including the National Stock Exchange of India, National Payments Corporation of India, Bombay Stock Exchange, and State Bank of India.

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