ONDC, or the Open Network for Digital Commerce, is a non-profit company established by the Department for Promotion of Industry and Internal Trade of the Government of India. It is aimed at developing open e-commerce and promoting a more level playing field for retailers of all sizes. ONDC is not an application or intermediary, but rather a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers. Its creation was driven by the need to promote technological self-reliance, lower the barrier of entry to online commerce, and address non-competitive behavior by big e-commerce firms.

 

ONDC uses a free software methodology, open specifications, and open network protocols to enable consumers and merchants to transact goods and services independent of the platform or application. It is designed to keep a check on Big Tech companies from violating Consumer Protection (E-Commerce) (Amendment) Rules, 2021 by integrating them into an open-source decentralized network where data portability will break data silos while data interoperability will allow innovation.

 

The ONDC uses the Beckn Protocol, an open and interoperable protocol for decentralized digital commerce, as its backend. Beckn Protocol is a substitute for and compatible with the similar protocols developed by the US that are in use globally for transactions and sending information between computers. Beckn will provide the technology and specification layer on which ONDC will design the network policies, network trust, network grievance handling, and network reputation system. ONDC plans on implementing a dynamic pricing model, digitized inventory management, and optimize delivery costs to help reduce the cost of doing business for everyone on the platform.

 

The major objectives of ONDC include ending monopolies of the platforms, democratization, and decentralization of e-commerce, standardization of operations, inclusivity and access for sellers, especially small and medium enterprises as well as local businesses, increased efficiency in logistics, more choices and independence for consumers, and ensured data privacy and confidentiality. ONDC is compared to the Unified Payments Interface (UPI), a system that allows instant money transfers between bank accounts using a mobile device.

 

The ONDC Advisory Council was established to oversee the implementation of ONDC in the country. Its members were selected based on their experience in fields such as technology, finance, and commerce. The ONDC Advisory Council has already completed cascaded transactions in the pilot phase for grocery, food and beverage segment using Beckn Protocol. From June 24, 2022, the ONDC Advisory Council started working on network expansion, governance, and upgrade for the platform before nationwide rollout. ONDC will work on a hyperlocal search engine model based on GPS proximity data as default setting. The buyer can independently select the seller and logistics partner to complete the order.

 

ONDC has the potential to revolutionize the e-commerce industry in India by providing a level playing field for all retailers, promoting competition, and protecting the interests of consumers. Its success will depend on the willingness of stakeholders to collaborate and embrace open digital ecosystems that foster innovation, efficiency, and inclusivity.