What is 'ONDC' initiative by GoI.

To reduce the dominance of e-commerce giants like Flipkart and Amazon, the government rolled out its big initiative — Open Network for Digital Commerce (ONDC) — for public in Bengaluru. With the help of ONDC, government plans to help small retailers and create an alternative to dominant global giants like Amazon and Walmart, who controls over half of India’s fast-growing e-commerce market.

The platform aims to create new opportunities, curb digital monopolies and by supporting micro, small and medium enterprises and small traders and help them get on online platforms. It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.

The government says existing platforms work in silos and are tightly controlled, keeping out many small players. It expects ONDC to increase competition and foster innovation by start-ups.
It also hopes to bring in logistics firms and others who can collaborate with sellers to deliver products to customers.

The focus would be on small merchants and rural consumers, with apps in Indian languages.
ONDC officials liken the network to a mall with 1,000 gates instead of just two, thereby limiting opportunities for selected sellers to receive preferential treatment – a common accusation against major e-commerce companies. Users will be able to rate service providers on ONDC, which will be applicable and visible across the network. The government says ONDC will help to end “predatory pricing, especially in high-margin, high-value products”. Amazon and Flipkart deny that they have engaged in predatory pricing.

How does ONDC work?

The ONDC platform lies in the middle of the interfaces hosting the buyers and the sellers. So far, the buyer side interface is being hosted by Paytm, whereas the seller side interface is being hosted by other players like GoFrugal, etc.

When a buyer searches for an item on the Paytm app, from where ONDC has gone live, the app will connect to the ONDC platform, which will connect it to seller side interfaces that will list all the companies from where you can buy the particular item.

On ONDC, there will be several other backend partners such as logistics service providers, enterprise resource planners, e-commerce store hosting service providers, etc.