The Open Network for Digital Commerce (ONDC) is an initiative by DPIIT, under the Ministry of Commerce & Industry in India, aiming to democratize digital commerce. Operating as a Section 8 company, ONDC is developing the ONDC Protocol, an open technical standard designed to increase interoperability among platforms, similar to UPI, HTTP, and SMTP.
Analysis: The key mission of ONDC is to lower the barriers to entry in digital commerce and to ensure a level playing field for all e-commerce models. By unbundling various stages of e-commerce transactions, the ONDC Network enables the creation of new business models and opportunities, thus expanding and making digital commerce more inclusive.
Much like how UPI facilitates interoperability among banks and payment platforms, or how SMTP allows seamless email exchange, the ONDC Protocol ensures interoperability among different platforms for buying and selling goods or services. This system-wide interoperability is made possible through the ONDC Registry, a directory of all registered and compliant platforms.
However, ONDC acknowledges the potential challenges associated with the transition from offline to online for many businesses. To mitigate these, the initiative is providing systems for assistance and capacity-building initiatives, ensuring a smooth and hassle-free transition.
Conclusion: The ONDC Network represents a significant step towards making digital commerce more accessible and inclusive in India. By ensuring interoperability between different platforms and encouraging new business models, the initiative not only promises to boost the digital economy but also promotes transparency, efficiency, and fair competition. Its overall impact will be measured by the ease of transition for offline businesses and the successful adoption of the ONDC protocol by e-commerce platforms.
Ministry of Commerce & Industry
Open Network for Digital Commerce to democratize digital commerce
ONDC Network lowers entry-barriers to digital commerce, provides level playing field and unbundles various stages of e-commerce transactions encouraging new business models and opportunities
Dated: 21 JUL 2023
The Open Network for Digital Commerce (ONDC) is a Section 8 company, under the initiative of DPIIT, with a mission to democratize digital commerce. ONDC develops and maintains the ONDC Protocol, an open technical standard similar to UPI, HTTP and SMTP. Any two platforms that are compliant with the ONDC Protocol can interoperate without specifically integrating with each other’s systems. The ONDC Protocol compliant applications together constitute the ONDC Network. Just as UPI enables interoperability of banks and payment platforms to transfer money, or SMTP allows people to exchange emails without worrying about which email service the recipient uses, the ONDC Protocol allows buyers and sellers to trade goods or services no matter which /platform they use, as long as the platforms are part of the ONDC Network.
The benefits of the ONDC Network include lower entry-barriers to digital commerce, providing Level playing field for all e- Commerce models and unbundling of various stages of e-commerce transactions to allow new business models and opportunities. Hence, ONDC ensures an expansion of digital commerce, making it more inclusive.
The challenges with the adoption of ONDC are that the ONDC Network is enabling offline businesses to move online for the first time, and hence this transition can be challenging. However, ONDC is providing systems for assistance and capacity building initiatives to make this transition smooth and hassle free.
ONDC promotes transparency, trust and efficiency through its design as well as operational practices including free and open-source standards and systems, decentralisation and privacy by design, participatory approach and transparency, level playing field, clear audit trail and protecting buyer and seller rights.
ONDC Network is based on open specifications namely the ONDC Protocol. Thus, any two platforms that are compliant with the ONDC Protocol can interact with each other without having to learn the other platform’s specific language for handling messages and processes.
This is achieved through the ONDC Registry. The Registry is like a phonebook which one can use to find other ONDC Protocol-compliant platforms. Details of all the registered platforms are in the registry after certification of the compliance to the protocol and signing the agreement of participation.
The Protocol and the Registry together create a collection of e- commerce platforms that can discover, connect and interact with each other. The ONDC Network includes multiple buyer applications and seller applications all working seamlessly with each other. With this open network, buyers can discover and purchase products/services from sellers using any seller application, through a single buyer application of their choice.
This information has been provided by the Union Minister of State for Commerce and Industry, Shri Som Parkash in a written reply in the Rajya Sabha today.
