Open Network for Digital Commerce (ONDC) [UPSC Notes]

A project on Open Network for Digital Commerce (ONDC) has been initiated by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India. 

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

The Open Network for Digital Commerce project has been in news recently, thus it is relevant for the current affairs part of various competitive exams as well as for the IAS exam (under Mains GS 2, GS 3, and Essay).

This article aims to provide detailed information on the ONDC – Open-sourcing Project, so that aspirants can prepare well for the upcoming UPSC Prelims and Mains examination. 

Amazon Joins ONDC

Amazon announced that it will join the Indian government’s ONDC (Open Network for Digital Commerce) platform.

  • This will be Amazon’s initial collaboration with ONDC.
  • Amazon said that it will integrate its logistics network and its software suite called SmartCommerce with ONDC. 
  • SmartCommerce is an Amazon Web Services-powered suite of SaaS products that enables MSMEs in India to build and scale their business across digital media and will have enablers for onboarding to the ONDC network.
  • The development is particularly important given that ONDC’s very purpose is to “democratise” e-commerce in India which is largely captured by Amazon and Flipkart. 
  • An ONDC strategy paper published in 2022 flagged the inability of marketplace sellers to move out of the platform ecosystem, given that the value created by these small players is stored with the larger platforms.
  • It also flagged the rising dominance of global players in India’s e-commerce ecosystem, pointing out that the large quantum of investment required to build competitors to the integrated solutions offered by the big players has become an entry barrier for digital marketplaces.

Open Network For Digital Commerce UPSC Notes PDF:-Download PDF Here

Looking for study material to prepare for the upcoming Civil Services Exam? 

Refer to the links below and complement your UPSC exam preparation:

Open Network For Digital Commerce – Overview

  1. To create a platform that can be utilised by all online retailers, Open Network for Digital Commerce will make e-commerce processes open-source.
    • Earlier, New e-commerce rules were released by the Ministry of Consumer Affairs for consumer protection. The rules seek to bring changes to how e-commerce marketplaces operate. 
  2. It is expected to digitize the entire value chain, standardize operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for consumers.
  3. On ONDC, buyers and sellers may transact irrespective of the fact that they are attached to one specific e-commerce portal.
  4. ONDC will encourage the usage of standardized open specifications and open network protocols, which are not dependent on any particular platform or customized one.

Read more:

E-commerce Rules
Consumer Protection Act, 2019

What does Open-Source Means?

An open-source project, software or process means that the process or project is made available freely for others to use, study, modify and distribute it. These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

For example, Apple’s operating system iOS is closed source whereas Google’s Android Operating system is open-source which means Apple’s iOS cannot be legally modified or reverse engineered, but Google’s Android OS can be modified for the hardware of various smartphone companies.  

Aim of ONDC

  1. The project ONDC is mainly aimed at curbing “digital monopolies”.
  2. ONDC, using open specifications and open network protocols independent of any specific platform aims at promoting open networks developed on open sourced methodology.

Also, read about Digital India – Objectives, Advantages & Challenges on the linked page.

Implementation of ONDC 

  1. The task of Open Network for Digital Commerce has been assigned to the Quality Council of India (QCI).
  2. ONDC is to integrate e-commerce platforms through a network based on open-source technology.
  3. The Open-sourcing project is likely to be on the lines of Unified Payment Interface – UPI, therefore several operational aspects such as onboarding of sellers, vendor discovery, price discovery, and product cataloging could be made open-source by e-commerce platforms. 

Significance of Open Network for Digital Commerce 

  1. If the ONDC gets implemented and mandated, it would mean that all e-commerce companies will have to operate using the same processes. 
  2. ONDC could give a huge booster shot to smaller online retailers and new entrants.
    • If ONDC is mandated, it could be problematic for larger e-commerce companies, which have proprietary processes and technology deployed for these segments of operations.

Read in detail about the Competition Commission of India (CCI) on the link provided here. 

Open Network For Digital Commerce UPSC Notes PDF:-Download PDF Here

Candidates preparing for the upcoming Civil Services Exam can get the detailed UPSC Syllabus and exam pattern at the linked article.

Related Links for preparation

Digital Divide In India Over The Top (OTT) Platforms in India
Bharat Interface for Money (BHIM) National Payments Corporation of India
Cashless Economy in India Competition Act, 2002
Economics Questions for UPSC Mains GS 3 Topic-wise GS 3 questions for UPSC Mains
Topic-wise GS 3 Questions for UPSC Mains IAS Prelims: UPSC MCQs On Government Schemes
IAS Toppers Government Exams
IAS Salary UPSC Books


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