Explained: India’s Digitalization – What is ONDC (eCommerce Revolution)

Digitization has become an essential part of India’s economic growth over the last few years, increasing social and economic equity by broadening access to information, markets, and public services; and bridging the infrastructure gap.

With the help of digital technology, India can create a just and equitable society.

Especially by leveraging India’s young population, India can claim up the ranks of nations. This population has a propensity for quick adaptation and frugal innovation.

We have succeeded in Digitalizing a large of our Social Activities and Economy.

India’s Digitalization

Take Aadhar for instance,

  • Made it Reach up to 1.3 billion people Today.
  • Today Aadhar works as a Foundational Identity for the people of our country, whose entire arrangement has been done with the help of digital platforms.
  • With help of Aadhar, India is today running the world’s largest direct benefit transfer program, which includes Aadhar-linked bank accounts of crores of people.
  • Thousands of crores of rupees are automatically transferred to accounts of those serving people whom the government wants to provide help.
  • Not only Money transfer, Today India has a Unique System where money can also be withdrawn from bank accounts with the help of the Aadhar Enabled Payment System.
  • With the help of this system, almost every month Millions of transactions are conducted across the country whose value is Thousands of crores.

Unified Payment Interface (UPI) – “UPI Chalega

Besides, Today India successfully Developed the Unified Payment Interface (UPI) platform which has Revolutionized in Entire sector of Digital payments.

  • With help of UPI developed by NPCI, 5,583 million transactions were conducted in April 2022 alone with a net value of more than 9,83,000 crores.
  • Launched in 2016, the Platform will witness such heights of success in such a short span of time, perhaps no one expected it.

FASTag system – #GoCashLess

On the same basis, India introduced the FASTag system which has played a major role in completely transforming Toll Payment Systems.

  • Today with help of FASTag more than 100 crores of revenue is generated in our country every day, meant to improve the Road Infrastructure of the Country.

Besides, Initiatives like Ayushman Bharat Digital Health Mission which is trying to implement a Unified Health Interface like the one above on a population scale.

India is moving fast on that Journey of Digitalisation, at end of which India is going to become an Example in Many ways for the Whole World.

With such Experience, Technology is being used by the Indian Govt in one such Emerging Sector of the country.

Developing User-Friendly platforms & technology is no less than a Revolution.

India's Digitalization - Aadhar, UPI, FASTag, & ONDC (What is Open Network for Digital Commerce, eCommerce, Structure, Idea, Aim, & Insights)
img src: NowThis (pixabay)

We are talking about India’s e-commerce sector, whose huge potential has forced the government to plan ONDC (Open Network for Digital Commerce)

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ONDC (Open Network for Digital Commerce)

An increasing internet user base and favorable market conditions create a huge potential for India’s e-commerce industry.

India’s e-commerce industry is expected to reach 200 billion dollars by 2027 from 22 billion dollars in 2018. With this exponential growth, India’s dream of becoming a five trillion dollar economy seems to be fulfilled.

At the same time, many changes are being seen in the domain of eCommerce. Today’s Indian e-market is being dominated by companies like Amazon and Flipkart.

  • Amazon was our country’s leading online marketplace in 2017
  • Flipkart and Myntra have also carved out their places over time

According to a survey conducted in May 2020, due to the lockdown during the pandemic, there has been a huge increase in the sales of online platforms.

Digitization of the economy with the help of UPI, internet speed, and digital literacy has shaped India’s e-commerce industry.

In 2018, E-commerce has generated avg. revenue of $50 per user in the Retail Market. By 2024, this figure is going to be 75 dollars per user.

Nevertheless, the government has seen an uneven distribution with a few e-commerce platforms trying to monopolize the e-commerce market. And Making consumers buy only those products that are promoted by or sponsored by the e-commerce platforms.

To make the distribution of the e-commerce cycle even in the economy. On 31 December 2021, a private sector-led, non-profitable company ONDC was formalized.

  • Incubated ONDC will democratize Indian e-commerce under the Department for Promotion of Industry and Internal Trade (DPIIT).  

ONDC Design and Adoption

To accelerate ONDC’s design and adoption, a Nine member advisory council was formulated.

Council consists of India's finest mindset bold, Nandan Nilekani (Non-Executive Chairman of Infosys), RS Sharma (National Health Authority CEO), Adil Zainulbhai (chairman of Nw18 Group), Anjali Bansal (Avaana Capital Founder), Arvind Gupta (Co-founder of Digital India Foundation).

The Idea of ONDC

Seeing Today’s uneven access and opportunities, ONDC (Open Network for Digital Commerce) will provide a level playing field to all the big and small players in the e-commerce sector.

  • Widen digital market access.
  • Small businesses and traders in India will be able to access India’s huge market reach with the help of the government.

Up until the present time, India’s e-commerce field is occupied by Amazon and Flipkart (who have monopolized the Indian e-commerce landscape), But with the help of ONDC (open network for digital commerce), the Indian govt wants to provide an alternative.

  • On 29 April, India launches its pilot phase of ONDC begins in 5 Cities (namely, Delhi[NCR], Shillong, Bhopal, Bengaluru, and Coimbatore)

Aims of ONDC

ONDC will help the consumer with real freedom of choice by providing access to any producer and seller of other applications and platforms.

The government made it clear to the user that ONDC is a non-platform-centric initiative. Where ONDC meets online customer demand by sourcing the nearest source of supply. 

  • With the help of this platform, consumers can avail any kind of product or service from sellers throughout India. –real freedom of choice.

Till now, the Unequal favor environment by eCommerce giants, small businesses couldn’t able to access the market, and customer’s freedom of choice is also restricted. ONDC will provide a level playing field.

ONDC acts as a neutral platform, same as UPIs open sources basis. Where Catalogiun, Vendor match, and price discovery protocols are set in place.

  • In simple terms, ONDC will allow transactions between consumers and sellers without the need to get attached to any specific e-commerce platform.
  • For e.g. seller X registered his products in platform A and the consumer is using a different platform B. But even then with the help of ONDC (common platform), consumers can buy seller products without getting attached to the e-commerce platforms.

ONDC aims to digitalize India’s value chain and standardize operations (like., supplier inclusion, logistic efficiency, and customer value can be argued).

ONDC is expected to be mandated by August 2022, after which all the e-commerce companies will operate on the same process.

Technology & Investments

Several e-commerce giants have protested this government initiative.

  • Reason: eCommerce companies must invest in their technology and process development in accordance with ONDC regulations.

But the Government with the help of ONDC by 2027, India’s e-commerce industry is expected to reach 200 billion dollars.

Understanding this approach of the government, more than 20 government and private organizations have confirmed investments worth Rs 2.55 billion (SBI, HDFC, PNB, and many other financial institutions are involved).

Looking at the success of Indian digitalization (i.e. Aadhar, UPI) by the Govt of India with the help of experts. Experts predict that ONDC will work to bring the digital revolution in the same way.

ONDC – Transforming Indias Retail Market

  • As per the official purpose of ONDC, the objective of this platform is to create a freely accessible online system for traders and consumers.
  • The unspoken objective of ONDC is to curb the monopoly of amazon and Flipkart etc which are making small and local merchants vulnerable.
We must remember that these small and local merchants constitute the retail backbone of the country.
~ Seeing them being excluded from the economy due to e-commerce giants, Puts the country’s financial stability at risk.

Reports say: that Amazon and Flipkart have caputered 80% of India’s retail market with aggressive discounts and promotion of preferred sellers. – Expand their business with Aggressive Discount and Preferred Seller.

If the dominance of these e-commerce giants continues to grow, so they will also be in the same conditions that have happened to many family-owned businesses in other developed counties including the United States (e.g. Wallmart)

Due to the reasons outlined above, not-for-profit systems like ONDC are being developed by the Indian government which can address these concerns.

  • Like UPI, ONDC will be the world’s first platform to plug in small merchants and retailers and provide them reach on the scale of e-commerce giants.
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