India’s Digital Revolution: ONDC can build sovereignty

India’s Digital Revolution

By Jayajit Dash

India’s Digital Revolution: Amidst the vibrant landscape of India, a remarkable phenomenon unfurls—a swift and profound surge in the realm of digital commerce. Fueled by the expanding reach of the internet, the widespread embrace of smartphones, and the ever-evolving desires of consumers, this growth has blossomed into an unstoppable force. A report by Bain & Company offers a glimpse into the future, projecting that India’s e-commerce market will soar to a staggering $200 billion by 2026, propelled by a compound annual growth rate of 27%.

Yet, within this rapid ascent, a troubling truth emerges—the growth is marred by a lack of inclusivity and fairness. A small group of dominant players wield their power over the e-commerce sector, enjoying an unjust share of the market and invaluable data. These players often engage in unfair practices, such as predatory pricing, preferential treatment of sellers, and exclusive arrangements with prestigious brands. This makes it difficult for smaller players to enter the market and compete, creating an uneven playing field. It also enables the dominant players to drive down prices and limit competition, leading to decreased customer choice and higher prices overall.

Moreover, the vast majority of India’s retail sector, comprising countless small and medium enterprises (SMEs), micro, small, and medium enterprises (MSMEs), and humble kirana stores, remains anchored in the offline realm, disconnected from the dynamic currents of the digital economy. These businesses face myriad challenges when attempting to access online platforms, encountering formidable barriers to entry, a lack of digital literacy, and insufficient infrastructure.For example, the lack of access to financial resources, such as credit, makes it difficult for small, offline businesses to transform and compete in the digital space, where larger, more established players hold sway.

In response to these pressing issues and to cultivate a level playing field for all stakeholders within the e-commerce ecosystem, the Government of India has set forth on a transformative journey—the Open Network for Digital Commerce (ONDC) project. Embodied in a government-backed, private non-profit Section 8 company, ONDC aspires to forge a new path by developing open e-commerce standards and protocols, rooted in the ethos of open-source methodologies.

ONDC transcends the realm of mere applications, intermediaries, or software—it is a set of meticulous specifications crafted to foster open connections and profound exchanges between discerning shoppers, innovative technology platforms, and enterprising retailers. By embracing ONDC, the e-commerce realm will be imbued with a newfound sense of interoperability and data portability, empowering consumers to effortlessly access a diverse array of products and services across numerous categories, all through a singular and seamless checkout experience. Sellers, too, shall be unshackled, empowered to list their products on multiple platforms without restrictions or fees, and with the freedom to choose their preferred logistics and payment providers.

In addition, ONDC ignites a spirit of innovation and competition within the e-commerce sector, opening the door for both emerging and established players to offer value-added services and solutions, all built upon the bedrock of this open network. Fintech companies can extend a helping hand to sellers and buyers alike, offering credit and financing options, while tech companies can furnish indispensable tools for inventory management, cataloging, dispute resolution, and much more.

ONDC serves as a piece of a grand vision—the creation of Open Digital Ecosystems (ODEs) that transcend various sectors of the economy, encompassing health, education, agriculture, and beyond. These digital platforms, constructed upon open standards and APIs, facilitate a harmonious and seamless exchange of data and services among diverse participants. Through the power of ODEs, collaboration, innovation, and inclusion are kindled within the digital economy, dismantling data silos and diminishing information asymmetry.

Indeed, ONDC bears within it the potential to transform India’s digital commerce landscape, empowering millions of small businesses and consumers to partake in the online economy. Moreover, ONDC can foster India’s digital sovereignty, curbing its reliance on foreign platforms and technologies. Nonetheless, ONDC faces its own share of challenges and risks, which must be addressed.

One of the pivotal challenges lies in ensuring the adoption and acceptance of ONDC by the various stakeholders within the e-commerce ecosystem. ONDC will have to convince the existing large players to join the network and share their data and customers with other platforms. ONDC will also have to create awareness and trust among the small businesses and consumers about the benefits and security of using the network.

Another challenge is to ensure the quality and reliability of the services and products offered on the network. ONDC will have to establish clear standards and guidelines for quality assurance, consumer protection, data privacy, cybersecurity, etc. ONDC will also have to ensure effective dispute resolution mechanisms for handling complaints and grievances.

A third challenge is to ensure the sustainability and scalability of the network. ONDC will have to secure adequate funding and resources for developing and maintaining the network infrastructure and operations. ONDC also needs to make sure that the network can handle the increasing volume and variety of transactions and data.

The future vision of ONDC is to create an open network that covers 25 per cent of India’s digital commerce within two years of launch. Besides, ONDC aims to expand its scope and reach to other domains such as food delivery, travel booking, education services, etc. ONDC also hopes to inspire other countries to adopt similar open networks for their e-commerce sectors.

ONDC is a bold and ambitious initiative that can revolutionize India’s digital commerce sector by making it more inclusive, competitive, innovative, and sovereign. It can serve as a model for creating open digital ecosystems in other sectors of the economy. It deserves support and participation from all stakeholders in the e-commerce ecosystem.Investing in ONDC is like planting a seed for a tree – it needs time, care, and resources to grow, but it can become a source of shade, shelter, and sustenance that will benefit everyone in the near and foreseeable future.