Open Network for Digital Commerce (ONDC), a public online network for merchants and customers, allows e-commerce platforms to interconnect and interoperate.
The Open Network for Digital Commerce (ONDC) is a transformative initiative by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, Government of India aimed at democratizing digital commerce. Launched in April 2022, ONDC is an initiative aiming at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. ONDC is based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform. It envisions creating a level playing field for sellers, buyers, and service providers across India, particularly small and medium enterprises (MSMEs). It serves as a unified platform where stakeholders can interact freely without the constraints of exclusive ecosystems. By fostering open protocols and reducing dependency on monopolistic platforms, ONDC aims to catalyze innovation and inclusivity in the digital commerce landscape.
With the vision to create an organization with a startup mindset supported by government, ONDC was incorporated as a non-profit, Section-8 company and incubated at the Quality Council of India. QCI was joined by Protean as the co-founder for incorporation of ONDC. With an authorized capital of Rs. 500 crore, any public and private banks and financial institutions have contributed equity to ONDC till now.
Objectives of ONDC Initiative
- Democratization of Commerce: Break the dominance of large e-commerce platforms by enabling interoperability across networks.
- Inclusivity: Empower small businesses, retailers, and local artisans to access the digital marketplace.
- Cost Efficiency: Lower the cost of customer acquisition and transaction processing for sellers.
- Market Expansion: Bridge regional and linguistic gaps, bringing untapped markets into the fold of digital commerce.
- Customer Empowerment: Increase options for buyers by providing access to a broader array of sellers.
How Does It Work?
ONDC employs open network protocols to facilitate seamless interaction between participants. The network enables buyers and sellers from different platforms to transact with each other using standardized APIs. The key components include:
- Decentralized Architecture: Unlike traditional platforms, ONDC does not own or operate e-commerce services. It acts as an enabler for interconnectivity.
- Open Protocols: Based on open standards, ONDC ensures that any seller or buyer platform adhering to these protocols can participate.
- Role Segregation: Participants are classified into roles such as Buyer Applications, Seller Applications, and Logistics Providers, ensuring clear delineation of responsibilities.
Roles on the ONDC Network
Participants play various roles to ensure efficient functioning:
- Buyer Applications: Platforms enabling customers to access sellers on the ONDC network.
- Seller Applications: Interfaces for businesses to list and manage their offerings.
- Logistics Providers: Facilitators for the movement of goods across regions.
- Technology Enablers: Providers of IT infrastructure and tools.
Collaborations with Government Departments/Ministries
ONDC actively collaborates with multiple government bodies to expand its reach and effectiveness:
- Ministry of MSME: To onboard small businesses and local artisans, enhancing their digital presence, for example, the MSME-TEAM Initiative.
- Ministry of Commerce and Industry: For policy alignment and fostering international trade through the ONDC network.
- Digital India Program: Leveraging digital infrastructure to ensure widespread access.
- Startup India: Promoting entrepreneurship and innovation by integrating startups into the ONDC ecosystem.
- Quality Council of India: DigiReady Certification (DRC) portal, launched in February 2024, aim to assess and certify digital readiness of MSME entities.
- Department of Fisheries: To provide a digital platform and empower all stakeholders including traditional fishermen, fish farmers producer organization, entrepreneurs from fisheries sector to buy and sell their products through e-market place, i.e., ONDC.
- Ministry of Agriculture & Farmers Welfare and NABARD: Onboarding Farmer Producer Organizations (FPOs) and farmers to the network.
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