From UPSC perspective, the following things are important :
Prelims level : ONDC
Mains level : E-Commerce facilitation by GOI
Central idea: The article discusses the Indian government’s plan to launch the Open Network for Digital Commerce (ONDC) to support small retailers and businesses against large tech-based e-commerce firms.
- The ONDC is a private non-profit Section 8 company established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India.
- It aims to develop open e-commerce by creating a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.
- It was incorporated on December 31, 2021, with an initial investment from Quality Council of India and Protean eGov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited).
What exactly is ONDC?
- The ONDC is not an application, an intermediary, or software but a set of specifications.
- The ONDC seeks to provide an open-source platform for digital commerce that will enable small retailers and businesses to compete with large e-commerce firms by providing them with access to a wider customer base and reducing the costs of doing business.
What does one mean by ‘Open-sourcing’?
- Free for all: An open-source project means that anybody is free to use, study, modify and distribute the project for any purpose.
- Open licensing: These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.
What processes are expecting to be open-sourced with this project?
- Several operational aspects including onboarding of sellers, vendor discovery, price discovery and product cataloguing could be made open source on the lines of Unified Payments Interface (UPI).
- If mandated, this could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.
What does the DPIIT intend from the project?
- ONDC is expected to-
- Digitize the entire value chain,
- Standardize operations,
- Promote inclusion of suppliers,
- Derive efficiencies in logistics and
- Enhance value for stakeholders and consumers
Countering ‘Digital Monopoly’
- Digital monopolies refer to a scenario wherein e-commerce giants or Big Tech companies tend to dominate and flout competition law pertaining to monopoly.
- The Giants have built their own proprietary platforms for operations.
- In March, India moved to shake up digital monopolies in the country’s $ 1+ trillion retail market by making public a draft of a code of conduct — Draft Ecommerce Policy, reported Bloomberg.
- The government sought to help local start-ups and reduce the dominance of giants such as Amazon and Walmart-Flipkart.
- The rules sought to define the cross-border flow of user data after taking into account complaints by small retailers.
Processes in the ONDC
- Sellers will be onboarded through open networks. Other open-source processes will include those such as vendor and price discovery; and product cataloging.
- The format will be similar to the one which is used in the Unified Payments Interface (UPI).
- Mega e-commerce companies have proprietary processes and technology for these operations.
- Marketplaces such as Amazon, Flipkart, Zomato, BigBasket and Grofers will need to register on the ONDC platform to be created by DPIIT and QCI.
- The task of implementing DPIIT’s ONDC project has been assigned to the Quality Council of India (QCI).
Why such a move by the govt?
- This COVID pandemic has made every business to go digital.
- India is a country with 700 million internet users of whom large crunch of population are active buyers on e-coms.
- There are 9 platforms in the world which are billion user platform and all are private. This is the monopoly which the govt aims to hit.
- No country would ever want a few (foreign) companies to control their domestic e-commerce ecosystem.
- Countries like US are struggling to control their monopoly over the e-commerce giants leaving no space for Indian legislations to control these overseas companies.
- In India Amazon, Walmart, Uber are controlling larger crunch of share in the market leaving very less scope for domestic companies to cope up with.
Scope for ONDCs success
- Over last 50 years India is dealing with Big Tech companies with responsibility and pragmatic manner. Now it is also coming with new policies to control them.
- The drafting panel has extraordinary persons like Mr. Nandan Nilekani and others who were in Aadhar, NPCI, MyGov, Retail industry and these make it inclusive and innovative.
- India has successfully executed various public digital platforms like JAM Trinity, Aadhar linked projects. India for sure can handle its digital ecosystem better in e-coms too.
- Open-sourcing will benefit society at large as did the UPI.
Issues that can be raised
- Monopolies: Draft E-Commerce policy can raise resistance from companies like Amazon, Flipkart, and Walmart etc.
- EODB concerns: They may raise hues over operability and ease of doing business.
- Compliance burden: MSMEs have already raised the growing compliance burden for e-commerce.
- Every platform has its own challenges so would the ONDC may have.
- While UPI was ruled out (BHIM being the first) people were reluctant in using it due to transaction failures.
- With subsequent improvements and openness people and businesses are using it in every walks of life. So it would work with ONDC.
- Once adopted, ONDC will make sure consumer and seller interest will be protected as the UPI did.
- Best is yet to come and we are in 4th industrial revolution where the Govt should strengthen itself accordingly and make businesses inclusive and restrict monopolies.
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