Digital India Initiatives

ONDC will help small retail survive against large E-Com firms: Union Minister


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.

About ONDC

  • 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-
  1. Digitize the entire value chain,
  2. Standardize operations,
  3. Promote inclusion of suppliers,
  4. Derive efficiencies in logistics and
  5. 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.

Other challenges

  • 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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