Open Network Digital Commerce (ONDC)

February 9, 2024

GS Paper III Indian Economy

Context:

Recently, the Himachal Pradesh government started a pilot program to connect Fair Price Shops to the Open Network for Digital Commerce (ONDC) platform.

What is a Fair Price Shop?

Fair Price Shops are government-approved stores that sell essential goods at subsidized prices to people with ration cards.
The Essential Commodities Act of 1955 allows some shops to sell necessary goods at subsidized rates.
This is facilitated by implementing the Targeted Public Distribution System (TPDS).

About Open Network Digital Commerce (ONDC)

Open Network Digital Commerce (ONDC) is an interoperable network based on the BeckN protocol that anyone can piggyback on.
The ONDC entity, a not-for-profit company incorporated under Section 8 of the Companies Act 2013, manages and operates the ONDC Network.
It is responsible for building and maintaining the underlying infrastructure (common registries and protocols) and defining the rules of engagement and code of conduct for the Network Participants through the ONDC Network Policy and the ONDC Network Participant Agreement.
Seamless operations: It seeks to break down silos in digital commerce by enabling platforms of varying configurations (big or small) to connect and operate seamlessly on it.
Network Participants: It comprises different entities called Network Participants, including Buyer Applications, Seller Applications, and Gateways that perform the search and discovery function
Open network model: The government wants to change the fundamental structure of the e-commerce market from the current platform-centric model to an open network model.

Benefits Of Open Network Digital Commerce

Small businesses: Easier discoverability, wider platform reach, platform-independent operations.
Consumers: Wider choice, access to local sellers, price comparison across platforms.
Government: Promotes competition, fair play, and innovation in e-commerce.
Inclusion: Enables participation of small businesses beyond dominant platforms.
Efficiency: Standardized operations streamline logistics and transactions.
Value creation: Enhanced competition benefits consumers with better prices and choices.

Difference Between Open Network Digital Commerce And Existing E-commerce Platforms

Feature	E-commerce Platforms	Open Network Digital Commerce (ONDC)
App Download	Required to purchase online	Not required: Buyers can shop online
Model	Platform-centric: Buyer & seller use same platform	Open-network: Works across multiple platforms & apps
Hyper-local Focus	Limited	Encourages local business discovery & connection
Product Categories	Wide variety	Currently limited to F&B, groceries, home decor
Ownership	Private companies	Decentralized, no single entity owns
Onboarding Fee	High	Lower and market-driven
Options for Buyers/Sellers	Limited (dominated by few sellers)	More diverse, seller filterable by buyers
Transferable Reviews	No, restart required on new platform	Yes, reviews transferable across ONDC platforms

Also Read: One Nation One Ration Card Scheme (ONORCS)

News Source: PIB

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