Why in News?

• Amazon has announced that it will join the Indian government’s ONDC (Open Network for Digital Commerce) platform.
• The development is particularly interesting given that ONDC’s very purpose is to “democratise” e-commerce in India which is largely captured by Amazon and Flipkart.

What’s in Today’s Article?

• What is ONDC?
• What Led to the Creation of ONDC?
• How will the ONDC Work?
• News Summary Regarding Amazon Joining ONDC

What is ONDC?

• It is a private non-profit company established by the Department for Promotion of Industry and Internal Trade (DPIIT), Union Ministry of Commerce and Industry, to develop open e-commerce.
• It was incorporated in 2021 with initial investment from Quality Council of India (QCI) and Protean eGov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited).
• ONDC is not an application, an intermediary, or software, but a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.
• It is designed to -
  • Keep check on Big Tech companies from violating Consumer Protection (E-Commerce) (Amendment) Rules, 2021, due to concentration of market power.
  • By integrating them into an open-source decentralised network where data portability will break data silos while data interoperability will allow innovation. 

What Led to the Creation of ONDC?

• Technological self-reliance
• Demand for level playing field mainly from small retailers
• Lower the barrier of entry and discovery online
• Adoption of open digital ecosystem across key sectors
• Fixing the non-competitive behaviour of big e-commerce firms like Amazon and Flipkart
• To capture the US$810 billion domestic retail market

How will the ONDC Work?

News Summary Regarding Amazon Joining ONDC:

• ONDC is a government-backed project aimed at enabling small merchants and kirana stores in parts of the country to access processes and technologies typically deployed by large e-commerce platforms.
• It is being developed as a counter to the current duopoly (2 players domination) in the Indian e-commerce market which is largely dictated by Amazon and Walmart-owned Flipkart.
• In 2022, Microsoft became the first big technology company to join the network with an intention to introduce social e-commerce - group buying experience - in the Indian market.
• Amazon said that it will integrate its logistics network and its software suite called SmartCommerce with ONDC.
• This will enable MSMEs in India to build and scale their business across digital mediums and will have enablers for onboarding to the ONDC network.
• A number of other participants (like Paytm, Reliance-backed Dunzo) are also currently live on the ONDC network, offering a number of services in the e-commerce supply chain such as buying, selling and offering logistics services.