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Explained: What is ONDC project and how will it curb digital monopolies?

Explained: What is ONDC project and how will it curb digital monopolies?

By CNBCTV18.com Jul 6, 2021 10:15:02 PM IST (Updated)

Through ONDC, DPIIT intends to make e-commerce processes open-sourced so that they can be accessed by any and all online retailers.

The Department for Promotion of Industry and Internal Trade (DPIIT) appointed an advisory council on Monday to fast-track its Open Network for Digital Commerce (ONDC) project.

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Through ONDC, DPIIT intends to make e-commerce processes open-sourced so that they can be accessed by any and all online retailers.

The purpose of project

ONDC seeks to promote open networks, which are developed using the open-source methodology. They will encourage the usage of standardised open specifications and open network protocols, which are not dependent on any particular platform or customised one.

ONDC is expected to digitise the entire value chain, standardise operations, promote inclusion of suppliers, derive efficiencies in logistics and enhance value for stakeholders and consumers. They will provide a level-playing field.

An open-source project means that anybody is free to use, study, modify and distribute the project for any purpose. These permissions are enforced through an open-source licence easing adoption and facilitating collaboration.

Committee members

A nine-member advisory council has been constituted to advise the government on measures needed to design and accelerate the adoption of ONDC.

Nandan Nilekani, non-executive chairman, Infosys and RS Sharma, CEO of National Health Authority and the former chairman of the Telecom Regulatory Authority of India (TRAI) are on the council.

The other members are: Adil Zainulbhai, chairman, Quality Control of India; Anjali Bansal, founder, Avaana Capital; Arvind Gupta, co-founder, Digital India Foundation; Dilip Asbe, CEO, National Payments Corporation India; Suresh Sethi, managing director and CEO, NSDL e-Governance; Praveen Khandelwal, secretary general, CAIT; Kumar Rajagopalan, CEO, Retailers Association of India (RAI).

Digital monopolies

Digital monopolies refer to a scenario wherein e-commerce giants or Big Tech companies tend to dominate and flout competition law pertaining to monopoly.

The giants have built their own proprietary platforms for operations.

In March, India moved to shake up digital monopolies in the country's $ 1+ trillion retail market by making public a draft of a code of conduct -- Draft Ecommerce Policy, reported Bloomberg.

The government sought to help local start-ups and reduce the dominance of giants such as Amazon and Walmart-Flipkart. The rules sought to define the cross-border flow of user data after taking into account complaints by small retailers.

The government wants to ensure that local players are able to access the data first. Safeguards under consideration include regulation and audits of the cross-border flow of data of Indian consumers and users.

The proposals also seek to prevent the e-commerce giants from giving deep discounts and have exclusive tie-ups with preferred sellers.


Sellers will be onboarded through open networks. Other open-source processes will include those such as vendor and price discovery; and product cataloguing.

The format will be similar to the one which is used in the Unified Payments Interface (UPI).

Mega e-commerce companies have proprietary processes and technology for these operations. Marketplaces such as Amazon, Flipkart, Zomato, BigBasket and Grofers will need to register on the ONDC platform to be created by DPIIT and QCI.

The task of implementing DPIIT’s ONDC project has been assigned to the Quality Council of India (QCI).

QCI was set up in 1997 by the government of India jointly with Indian industry (represented by CII, FICCI and ASSOCHAM) as an autonomous body under the administrative control of the department.

QCI establishes and operates the National Accreditation Structure for conformity assessment bodies; providing accreditation in the field of education, health and quality promotion.

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