Context: 

• The government of India announced the launch of the pilot phase of Open Network for Digital Commerce (ONDC) in five cities in late April with an aim to “democratise” the country’s fast growing digital e-commerce space.

Image Source: The Hindu

About ONDC:

• As per the strategy paper on ONDC, it is a not-for-profit organisation that will offer a network to enable local digital commerce stores across industries to be discovered and engaged by any network-enabled applications.
• It is neither an aggregator application nor a hosting platform, and all existing digital commerce applications and platforms can voluntarily choose to adopt and be a part of the ONDC network.
• The ONDC model is trying to replicate the success of the Unified Payments Interface (UPI) in the field of digital payments. 
  • UPI allows people to send or receive money irrespective of the payment platforms they are registered on.
• The open network concept also extends beyond the retail sector, to any digital commerce domains including wholesale, mobility, food delivery, logistics, travel, urban services, etc.

What led to formation of ONDC?

• The Department for Promotion of Industry and Internal Trade (DPIIT) conducted an outreach during COVID-19 to assess its impact on small sellers and hyperlocal supply chains. 
• They found a gap between online demand and local retail’s ability to participate. 
• After consulting with various ministries and experts, the idea for ONDC was born, with the goal of revolutionizing digital commerce in India.

Benefits of ONDC:

• The ONDC will standardize operations like cataloguing, inventory management, order management and order fulfillment, hence making it simpler and easier for small businesses to be discoverable over network and conduct business.

News Source: The Hindu