India is one of the world's fastest-growing major economy and third-largest consumer market. The rapid growth in the economy has led to rising incomes and an increase in Internet penetration. Internet users in India are expected to grow to 900 million by 2030 from has 622 million in 2020. These factors has led to a significant rise in digital payments. The rise in Digital payments was further supported by digital payment reforms such as the United Payment Interface (UPI) and Ru-pay. As of October 2022, India's UPI processed 7.3 billion transactions valued at Rs. 12.11 trillion (US$ 146.51 billion), a record-high transaction value. Increasing Internet penetration, rising incomes, and a rise in India's digital payments ecosystem have given rise to India's e-commerce sector. In recent years, India's e-commerce sector has grown significantly. Only a few major e-commerce companies have dominated India's e-commerce sector. Thus to democratize India's e-commerce sector and assist India's seller ecosystem India has launched the Open Network for Digital Commerce (ONDC) Initiative.
Open Network for Digital Commerce (ONDC)
India's ONDC is considered the UPI for the Indian e-commerce ecosystem. The main aim of ONDC is to democratize and promote an open network for all aspects of the exchange of goods and services. ONDC is based on an open-sourced approach, with open standards and open network protocols that are platform-independent. ONDC's foundations are open protocols for all aspects of the entire chain of activities in the exchange of goods and services; it is similar to a hypertext transfer protocol for information exchange over the internet, a simple mail transfer protocol for email exchange, and a unified payment interface for payments.
These open protocols would be used to build public digital infrastructures such as open registries and open network gateways to enable information exchange between buyers and sellers. Businesses could communicate information and conduct transactions over ONDC. Thus, ONDC expands on the present platform-centric digital commerce model, in which the buyer and seller must utilize the same platform or application to be digitally visible and conduct a commercial transaction. ONDC would expand the network for buyers and sellers.
Major Components of ONDC
ONDC would help reimagine India's e-commerce industry and help it adopt a more open and inclusive model. ONDC is a network that facilitates the establishment of location-aware, local digital commerce businesses across industries. Any network-enabled program can discover and engage with it. It is a platform for hosting all existing digital commerce apps and platforms that may adopt it and become a member of the ONDC network. Several components will help build ONDC. These components include:
Private Sector Initiatives
As ONDC gains pace, major private companies and startups have joined the network. A few of these companies include:
Like UPI, ONDC will propel the growth of the Indian e-commerce sector and democratize it, transforming it from platform-centric to an open network for buyers and sellers. This would completely revolutionize India's e-commerce and help it grow faster. ONDC would help small and medium businesses become more discoverable throughout India and push Indigenous industries to a digital market. ONDC complied with India's digital payment reform UPI would help push India's digital sector forward. According to Prime Minister Mr. Narendra Modi, India's Digital sector will reach US$ 1 trillion by 2025. ONDC would bring a paradigm shift and completely revolutionize India's digital commerce.