Digital India Initiatives

Open Network for Digital Commerce (ONDC) Project

Note4Students

From UPSC perspective, the following things are important :

Prelims level : ONDC Project

Mains level : Policy support against digital monopolies in India

The Department for Promotion of Industry and Internal Trade (DPIIT) has issued orders appointing an advisory committee for its Open Network for Digital Commerce (ONDC) project.

What does one mean by ‘Open-source’?

  • An open-source project means that anybody is free to use, study, modify and distribute the project for any purpose.
  • These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

What is ONDC Project?

  • ONDC seeks to promote open networks, which are developed using the open-source methodology.
  • The project is aimed at curbing “digital monopolies”.
  • This is a step in the direction of making e-commerce processes open-source, thus creating a platform that can be utilized by all online retailers.
  • They will encourage the usage of standardized open specifications and open network protocols, which are not dependent on any particular platform or customized one.

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 is the significance of making something open-source?

  • Making a software or a process open-source means that the code or the steps of that process is made available freely for others to use, redistribute and modify.
  • If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes.
  • This could give a huge booster shot to smaller online retailers and new entrants.

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.

What is a ‘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 cataloguing.
  • 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).

Back2Basics: Quality Council of India

  • QCI was set up in 1997 by the government of India jointly with Indian industry (represented by CII, FICCI and ASSOCHAM) as an autonomous body under the administrative control of the department.
  • QCI establishes and operates the National Accreditation Structure for conformity assessment bodies; providing accreditation in the field of education, health and quality promotion.
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