📝Open Network for Digital Commerce in India

#ondc #digitalcommerce #india #ecommerce #opennetwork

ONDC aims to democratize digital commerce in India through an open network built on open protocols.

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India's Commerce Ecosystem

This section provides an overview of India's digital commerce ecosystem and the opportunities for transformation.

World of Digital Commerce Impact

Digital commerce is globally reshaping business environments and fostering inclusive opportunities, especially for small businesses.

Digital Commerce in India Overview

India's digital commerce industry has gained significant momentum, but also faces critical shortcomings.

Fastest-Growing Economy

India has emerged as the fastest-growing economy globally, aspiring to be a top three economic power in 10-15 years.

Accelerated Digital Transformation

Digital transformation, connectivity, smartphone penetration, and startup investments are key growth factors.

COVID-19 Exposed Shortcomings

The pandemic revealed critical shortcomings in India's digital commerce, with many retail chains digitally absent.

Limited Digital Commerce Penetration

Digital commerce has a limited share in India's overall retail segment, indicating significant limitations.

Platform Growth Limitations

Rapid growth of integrated platforms limited competitiveness for new sellers and required significant investment.

Challenges of Current Market Structure

Sellers on multiple platforms face higher costs and limited flexibility due to separate infrastructure and terms.

Compounded Problems in India

India's large and diverse digital commerce ecosystem compounds these challenges, requiring a coordinated strategy.

Transformational Opportunity

The current challenges present a transformational opportunity to establish an alternative model for digital commerce.

Reimagining Digital Commerce on Open Network

This section explains the paradigm shift needed for digital commerce and the principles of an open network approach.

Platforms to Network Paradigm Shift

A new market structure is needed for broad-based participation in digital commerce, emphasizing trust.

Principles of Alternative Approach

Solutions for population-scale digital marketplaces must be built on inclusive principles.

Concept of Open Network

An Open Network goes beyond current platform-centric models by enabling transactions across interoperable platforms.

Constituents of an Open Network

Setting up an open network requires rethinking tech infrastructure to allow value flow and 'unbundling' the current system.

Genesis of ONDC

ONDC was envisioned after identifying bottlenecks in India's digital commerce and inspired by population-scale solutions.

Conceptualization of ONDC

ONDC is a globally first-of-its-kind initiative aiming to reimagine digital commerce in India based on open protocols.

Open Network Model

It will be an open network developed on open protocols with open-source specifications and established registries.

ONDC Objectives

ONDC is being set up with objectives to promote interoperability, scale, and innovation.

1Promote Interoperability→2Minimal Public Digital Infrastructure→3Population-Scale Adoption→4Small-Business Friendly Digital Commerce→5Unlock Innovation→6Rapid Digitalization of MSMEs and Consumers

ONDC Foundation Pillars

ONDC is based on three foundational pillars: Open Network, Public Digital Infrastructure, and Open Ecosystem.

Understanding ONDC Better

ONDC is a network enabling location-aware, local digital commerce, not an aggregator or hosting platform.

Voluntary Adoption for Apps

Existing digital commerce apps can voluntarily adopt and be part of the ONDC network.

Responsibility of Network-Enabled Apps

Network-enabled applications retain responsibility for onboarding sellers/buyers and managing the order lifecycle.

What ONDC Is and Is Not

ONDC is a market and community-led open network, not a government body or central intermediary.

Aspect	What ONDC Is	What ONDC Is Not
Initiative Type	Market and Community-led initiative	A Government Regulatory Body
Network/Platform	An open network	An application or a platform
Intermediary Role	Eliminates the need for a central intermediary	A central intermediary
Commerce Expansion	An enabler for massive digital commerce expansion	A medium to help digitize businesses
Innovation	An enabler for broad-based innovation	—

Democratization of Digital Commerce

ONDC will enable large-scale democratization of digital commerce, providing a level playing field for all app sizes.

Building Blocks of ONDC

ONDC's building blocks include technology components, network participants, policies, and data policy.

Technology Components

Key technology components include registry, gateway, buyer and seller applications, and adapter interfaces.

Network Participants (NP)

ONDC's decentralized network success depends on wide participation from buyers and merchants.

Network Policies

ONDC will adopt a minimalistic, non-restrictive policy framework to promote transparent, inclusive, and sustainable practices.

Data Policy

The data policy will comply with existing laws and emerging bills while balancing privacy with business needs.

IT Act and Personal Data Protection Bill Compliance

The data policy will comply with the Information Technology Act, 2000, and emerging Personal Data Protection Bill.

Evolvable Regulatory Design

ONDC strives to adopt an evolvable regulatory, institutional, and technology design for secure data sharing.

Key Principles of Data Privacy

ONDC adopts key principles for data privacy, ensuring secure and controlled data exchange.

1Data Exchange for Transactions→2Transaction Data Resides with Apps→3Consent-Based Data Exchange→4Data Security and Credibility→5PII and Seller Data Protection→6Anonymized Performance Metrics

Adoption of Data Empowerment Architecture

ONDC will learn and adopt initiatives from India's Data Empowerment and Protection Architecture for data privacy.

Enhancing Value for Ecosystem

ONDC will provide significant benefits across the digital commerce ecosystem, enhancing value for all stakeholders.

Increased Choices and Financial Gains

ONDC will offer increased choices to merchants/consumers, leading to strong financial gains through efficiency and reduced acquisition costs.

Evangelist for Technology Platforms

ONDC will act as an evangelist for technology platforms, helping them socialize solutions and experiment with new business models.

ONDC Value Proposition for Stakeholders

ONDC offers distinct value propositions for sellers, buyers, and technology platforms.

Benefits for Sellers

Sellers gain access to more buyers, higher discoverability, autonomy, and lower business costs.

Benefits for Buyers

Buyers experience more choices, enhanced service levels, and better customer experiences.

Benefits for Technology Platforms

Technology platforms gain growth access, reduced time-to-market, and new innovation opportunities.

Evangelizing Digital Commerce in India

ONDC supports the transformation of India's digital commerce market through large-scale participation and significant growth.

Market Transformation Support

ONDC supports the transformation of the ₹2.85 Lakh Crores (USD 38 Billion) Indian digital commerce market.

Envisioned Aspirations of ONDC

ONDC's aspirations include enabling local retail, expanding coverage, formalizing businesses, and enhancing efficiencies.

1Local Retail Ecosystem Access→2Easy Business Participation→3Expand Digital Commerce Landscape→4Formalize Businesses→5Economic Development and Livelihood Creation→6Enhance Business Efficiencies→7Increase Local Goods Trade

Potential Market Transformation Opportunity

ONDC is expected to fuel significant growth in retail digital commerce over the next 5 years.

Implementing ONDC

ONDC implementation focuses on institutional setup, roles, governance, and a phased strategy for population-scale adoption.

Institutional Setup

ONDC must be structured to make quick decisions, build technology, and respond to business needs.

Role of ONDC Entity

The ONDC entity is responsible for developmental, network facilitation, and service delivery roles.

Governance

ONDC functions under existing regulatory oversight and collaboratively develops a Network Code of Conduct.

Implementation Strategy

Implementing ONDC at a population scale is a long-term plan, designed to address challenges in trust-building.

Trust-Building Challenges

ONDC will face challenges building trust among small and large digital commerce companies and managing user expectations.

Focus Areas for Execution

The implementation strategy focuses on three key aspects: technology, business, and institution building.

Short Term Implementation Strategy

The short-term strategy focuses on rapid rollout, technology development, and ecosystem expansion.

1QCI Project Mode Implementation→2Technology Development for Launch→3Ecosystem Expansion and Onboarding→4In-House Capability Development

Long Term Implementation Strategy

The long-term strategy involves strengthening ONDC's roles, fostering innovation, and continuous expansion.

1Strengthen Roles→2Innovative Solutions Collaboration→3Refine Rules and Compliance→4Scale Foundational Services→5Expand Across Dimensions→6Develop Communication and Business Models

Appendix

The appendix provides information on the ONDC Advisory Council, supporters, and an invitation for feedback.

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APEX

Open Network for Digital Commerce in India

ONDC aims to democratize digital commerce in India through an open network built on open protocols.

Made with Rinto — analyse your own content free

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SECT

India's Commerce Ecosystem

This section provides an overview of India's digital commerce ecosystem and the opportunities for transformation.

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SUP

World of Digital Commerce Impact

Digital commerce is globally reshaping business environments and fostering inclusive opportunities, especially for small businesses.

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EVID

COVID-19 fueled global growth

COVID-19 significantly fueled the growth of digital commerce worldwide, especially in retail B2C and B2B sectors.

DATA

Retail Digital Commerce Growth 2019-2020

Digital commerce share in total retail sales rose from 16% in 2019 to 19% in 2020.

EVID

B2C Sales Spike

There was a spike in B2C sales for medical supplies, household essentials, and food products.

EVID

B2B Digital Commerce Increase

COVID-19 also resulted in increased business-to-business (B2B) digital commerce.

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SUP

Digital Commerce in India Overview

India's digital commerce industry has gained significant momentum, but also faces critical shortcomings.

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EVID

Fastest-Growing Economy

India has emerged as the fastest-growing economy globally, aspiring to be a top three economic power in 10-15 years.

DATA

Q1 FY22 GDP at Current Prices

India's GDP at current prices stood at ₹51.23 lakh crore in the first quarter of Financial Year 2022.

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EVID

Accelerated Digital Transformation

Digital transformation, connectivity, smartphone penetration, and startup investments are key growth factors.

DATA

Online Shopper Base

India has the third-largest online shopper base globally, with 14 crore e-retail shoppers in 2020.

DATA

Generation-Z Consumer Growth

This number is expected to grow by adding 37 crore Generation-Z consumers by 2030.

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RISK

COVID-19 Exposed Shortcomings

The pandemic revealed critical shortcomings in India's digital commerce, with many retail chains digitally absent.

EVID

Supply Chain Breakdown

Most parts of the retail chain were digitally absent, leading to a complete breakdown of the supply chain.

DATA

Kiranas Digital Exclusion

Around 1.2 crore Kiranas, accounting for 80% of retail, are 90% digitally excluded.

DATA

MSMEs Digital Exclusion

4.25 crore MSMEs, with potential to flourish, are not part of the digital revolution.

DATA

Online Shoppers Portion

Only about 20% of internet users in India are online shoppers.

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RISK

Limited Digital Commerce Penetration

Digital commerce has a limited share in India's overall retail segment, indicating significant limitations.

DATA

Digital Commerce GMV in 2020

The GMV for digital commerce retail in India was ₹2.85 Lakh Crores (US$ 38 billion) in 2020.

DATA

GMV as Percentage of Total Retail

This GMV represents only 4.3% of the total retail GMV in India, below China (25%), South Korea (26%), and UK (23%).

DATA

Projected Digital Commerce Growth by 2026

Digital commerce in the retail sector in India is expected to grow to ₹15 Lakh Crores (US$ 200 billion) by 2026.

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EVID

Platform Growth Limitations

Rapid growth of integrated platforms limited competitiveness for new sellers and required significant investment.

RISK

Concentration Risk from Platforms

Increasing platform size leads to concentration risk for buyers and sellers, creating a single point of failure.

INSG

Platforms as 'Operators'

Platforms become 'operators' in the market, reducing small and medium businesses' freedom of participation.

RISK

Lack of Trust Portability

Sellers cannot port hard-earned reputation to other platforms, as value is locked into specific systems.

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RISK

Challenges of Current Market Structure

Sellers on multiple platforms face higher costs and limited flexibility due to separate infrastructure and terms.

EVID

Limited Choice and Discoverability

Buyers and sellers must be on the same platform to discover each other, limiting choice.

INSG

Compounded Problems in India

India's large and diverse digital commerce ecosystem compounds these challenges, requiring a coordinated strategy.

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SUP

Transformational Opportunity

The current challenges present a transformational opportunity to establish an alternative model for digital commerce.

DCSN

Shift to 'What Works at Scale'

There is a need to shift from 'scaling what works' to 'what works at scale' for digital commerce.

JUST

Opportune Time for Alternative Model

The Digital India initiative, vibrant IT sector, and pandemic urgency make it an opportune time for an alternative model.

JUST

India's History of Population-Scale Initiatives

India has a history of innovating population-scale initiatives like Aadhaar, UPI, GSTN, and ABDM to democratize markets.

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SECT

Reimagining Digital Commerce on Open Network

This section explains the paradigm shift needed for digital commerce and the principles of an open network approach.

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SUP

Platforms to Network Paradigm Shift

A new market structure is needed for broad-based participation in digital commerce, emphasizing trust.

DCSN

Shift to Decentralized Network

Solving population-scale problems requires a paradigm shift from monolithic platform-centric to facilitator-driven, interoperable decentralized networks.

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FRMW

Principles of Alternative Approach

Solutions for population-scale digital marketplaces must be built on inclusive principles.

SUP

Facilitator, not an Operator

The approach must allow value to flow across the chain, adding value to all stakeholders.

SUP

Decentralized Technology

Technology should act as a catalyst, not a gatekeeper, ensuring decentralization of facilities and control.

SUP

Open Building Blocks

Binding building blocks like communication protocols must be non-rivalrous and non-exclusive, acting as 'digital public goods'.

SUP

Interoperable Network

The network should promote interoperability to prevent value lock-in within a particular platform for participants.

SUP

Minimalistic Governance

As an orchestrator, it should adopt a minimalistic form of governance over a maximal control form.

SUP

Participant-Centric Ecosystem

The design must be inclusive, offering choice and agency to all participants through an 'ecosystem' approach.

SUP

Evolving Model

It should be a living model, constantly evolving through active participation, collaboration, and orchestration.

SUP

Energize Innovation

Equity encourages innovation and welfare by removing big entry barriers to participation and experimentation.

EVID

Government Encouragement

The Government of India encourages such an open network for commerce using new technology models.

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SUP

Concept of Open Network

An Open Network goes beyond current platform-centric models by enabling transactions across interoperable platforms.

EVID

Location-Aware Local Commerce

An Open Network based on open protocol enables location-aware, local commerce discoverability by any network-enabled application.

EXMP

Examples of Open Protocols

Examples of open protocols include IMAP/SMTP for emails, HTTP for the web, and UPI for payment systems.

EVID

Core Concepts

The open network is premised upon decentralization, openness, and greater user utility.

EVID

Technology Adoption

The network encourages accelerated adoption of technologies like AI, machine learning, and blockchain.

INSG

Supply Chain Unbundling

The open network protocol will unbundle the supply chain, shifting power from intermediaries to consumers, merchants, and service providers.

EVID

Broad Application

The open network concept extends to any digital commerce domain, including retail, mobility, food delivery, logistics, and urban services.

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SUP

Constituents of an Open Network

Setting up an open network requires rethinking tech infrastructure to allow value flow and 'unbundling' the current system.

SUP

'Unbundling' Complex Systems

'Unbundling' refers to breaking down a complex system into granular, separately operable activities or microservices.

EVID

Innovation Opportunities

Unbundling creates opportunities for innovation and new players in logistics, warehousing, payment, and accounting software.

REQ

Need for Common Open Protocol

A common 'open protocol' is needed as a medium of exchange to re-bundle distributed network components as required.

EVID

Interoperability via Open Protocol

The open protocol enables discovery, ordering, and fulfillment without mandating providers/consumers on the same platform.

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SUP

Genesis of ONDC

ONDC was envisioned after identifying bottlenecks in India's digital commerce and inspired by population-scale solutions.

EVID

DPIIT Outreach and Findings

DPIIT's COVID-19 outreach revealed a huge disconnect between online demand and local retail ecosystem participation.

EVID

Inspiration from Population-Scale Solutions

ONDC was envisioned by taking inspiration from UPI, IMAP/SMTP, and HTTP to revolutionize digital commerce.

EVID

Steering Committee Formation

DPIIT constituted a Steering Committee to analyze ONDC's potential and impact.

EVID

Project Management Unit (PMU)

A PMU was set up under the Quality Council of India (QCI) to convert the ONDC concept to reality.

EVID

Advisory Council Constitution

An Advisory Council was constituted with leaders involved in population-scale initiatives for implementation acceleration.

DCSN

QCI Mandated for Implementation

QCI was mandated to lead ONDC implementation until the Open Network for Digital Commerce Section 8 Company is established.

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SUP

Conceptualization of ONDC

ONDC is a globally first-of-its-kind initiative aiming to reimagine digital commerce in India based on open protocols.

EVID

Open Network Model

It will be an open network developed on open protocols with open-source specifications and established registries.

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CHKL

ONDC Objectives

ONDC is being set up with objectives to promote interoperability, scale, and innovation.

STEP

Promote Interoperability

Promote interoperability to create an open, inclusive, and competitive marketplace.

STEP

Minimal Public Digital Infrastructure

Be an enabler with minimal public digital infrastructure.

STEP

Population-Scale Adoption

Be scale efficient and build for population-scale adoption.

STEP

Small-Business Friendly Digital Commerce

Make digital commerce small-business friendly.

STEP

Unlock Innovation

Pave the way to unlock innovation for reimagining digital commerce.

STEP

Rapid Digitalization of MSMEs and Consumers

Ensure rapid digitalization of MSMEs and consumers.

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FRMW

ONDC Foundation Pillars

ONDC is based on three foundational pillars: Open Network, Public Digital Infrastructure, and Open Ecosystem.

SUP

Open Network Pillar

Scaling and innovating on Open Protocols, using Open-Source APIs, and a decentralized model are key to the Open Network.

SUP

Public Digital Infrastructure Pillar

Low-cost, scale-ready digital infrastructure designed as a public good allows mutual discoverability for buyers and sellers.

SUP

Open Ecosystem Pillar

An integrated community of innovators shares knowledge, driving voluntary adoption and community-led development.

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SUP

Understanding ONDC Better

ONDC is a network enabling location-aware, local digital commerce, not an aggregator or hosting platform.

EVID

Voluntary Adoption for Apps

Existing digital commerce apps can voluntarily adopt and be part of the ONDC network.

EVID

Responsibility of Network-Enabled Apps

Network-enabled applications retain responsibility for onboarding sellers/buyers and managing the order lifecycle.

CMPR

What ONDC Is and Is Not

ONDC is a market and community-led open network, not a government body or central intermediary.

Aspect	What ONDC Is	What ONDC Is Not
Initiative Type	Market and Community-led initiative	A Government Regulatory Body
Network/Platform	An open network	An application or a platform
Intermediary Role	Eliminates the need for a central intermediary	A central intermediary
Commerce Expansion	An enabler for massive digital commerce expansion	A medium to help digitize businesses
Innovation	An enabler for broad-based innovation	—

INSG

Democratization of Digital Commerce

ONDC will enable large-scale democratization of digital commerce, providing a level playing field for all app sizes.

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SECT

Building Blocks of ONDC

ONDC's building blocks include technology components, network participants, policies, and data policy.

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SUP

Technology Components

Key technology components include registry, gateway, buyer and seller applications, and adapter interfaces.

COMP

Adaptor Interfaces

Open APIs based on the Beckn protocol enable information exchange for transactions, integrating network participants.

COMP

Gateway

The Gateway ensures discoverability of all sellers by multicasting search requests from buyer applications.

COMP

Open Registries

Open Registries applications maintain lists of participants who join ONDC and network policies.

COMP

Buyer and Seller Side Applications

These applications enable end-users (demand side) and sellers/service providers (supply side) to transact on ONDC.

TIP

Reference App Rollout

ONDC may rollout or open-source reference applications to stimulate participation and help service providers build on them.

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SUP

Network Participants (NP)

ONDC's decentralized network success depends on wide participation from buyers and merchants.

EVID

Dual Roles for Participants

A network participant can play both buyer and seller roles, offering enhanced options across domains.

EVID

Diverse Participant Scale

Participants include large digital commerce platforms, small startups, aggregators, and white-labeled seller applications.

EVID

Innovation for Service Providers

Unbundling provides innovation opportunities for technology service providers to transform their platforms into profit centers.

EVID

Order Life Cycle Management

Network participants are responsible for managing the order life cycle, including onboarding, catalog, logistics, and payments.

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SUP

Network Policies

ONDC will adopt a minimalistic, non-restrictive policy framework to promote transparent, inclusive, and sustainable practices.

EVID

Collaborative Rule Development

ONDC will develop rules and a code of conduct for network activities in consultation with participants, covering various operational areas.

EVID

Machine-Readable Policies

ONDC aims to make policies machine-readable and enforceable for better compliance and transparency.

SUP

Dispute Resolution Facilitation

ONDC will act as a facilitator for dispute resolution, adopting mechanisms from NITI Aayog's ODR plan and RBI guidelines.

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SUP

Data Policy

The data policy will comply with existing laws and emerging bills while balancing privacy with business needs.

REQ

IT Act and Personal Data Protection Bill Compliance

The data policy will comply with the Information Technology Act, 2000, and emerging Personal Data Protection Bill.

REQ

Evolvable Regulatory Design

ONDC strives to adopt an evolvable regulatory, institutional, and technology design for secure data sharing.

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CHKL

Key Principles of Data Privacy

ONDC adopts key principles for data privacy, ensuring secure and controlled data exchange.

STEP

Data Exchange for Transactions

Digital commerce by design requires the exchange and transmission of data for transactions.

STEP

Transaction Data Resides with Apps

Transaction data will reside only with buyer and seller applications and will not be visible to ONDC.

STEP

Consent-Based Data Exchange

Policies around data exchange will evolve, be consent-based, and bound by purpose limitation.

STEP

Data Security and Credibility

ONDC will ensure data security and credibility at the transaction level, crucial for growth.

STEP

PII and Seller Data Protection

User's Personally Identifiable Information (PII) and critical seller data will be protected from third-party access.

STEP

Anonymized Performance Metrics

ONDC fosters principles for platforms to emit anonymized performance metrics, enabling informed policymaking and network robustness.

EVID

Adoption of Data Empowerment Architecture

ONDC will learn and adopt initiatives from India's Data Empowerment and Protection Architecture for data privacy.

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SECT

Enhancing Value for Ecosystem

ONDC will provide significant benefits across the digital commerce ecosystem, enhancing value for all stakeholders.

EVID

Increased Choices and Financial Gains

ONDC will offer increased choices to merchants/consumers, leading to strong financial gains through efficiency and reduced acquisition costs.

EVID

Evangelist for Technology Platforms

ONDC will act as an evangelist for technology platforms, helping them socialize solutions and experiment with new business models.

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CHKL

ONDC Value Proposition for Stakeholders

ONDC offers distinct value propositions for sellers, buyers, and technology platforms.

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SUP

Benefits for Sellers

Sellers gain access to more buyers, higher discoverability, autonomy, and lower business costs.

STEP

More Buyers and Growth

Access to more buyers and thus greater opportunity for growth.

STEP

Higher Discoverability at Low Cost

Significantly higher discoverability of business and products at very low cost.

STEP

Autonomy on Terms

Autonomy on terms due to multiple choices for being digitally visible.

STEP

Lower Cost of Doing Business

Lower cost of doing business, leading to better prices and margins in the long term.

STEP

Wider Options for Value Chain Services

Wider options for value chain services, such as logistics, to support business growth.

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SUP

Benefits for Buyers

Buyers experience more choices, enhanced service levels, and better customer experiences.

STEP

More Sellers and Choices

Access to more sellers and therefore more choices, leading to sustainable and improved price discovery.

STEP

Enhanced Services and Faster Deliveries

Enhanced service levels and faster deliveries due to access from hyper-local retailers.

STEP

Better Customer Experience

Better customer experience with enhanced scope for innovation.

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SUP

Benefits for Technology Platforms

Technology platforms gain growth access, reduced time-to-market, and new innovation opportunities.

STEP

Access Growth from Digital Commerce

Access growth from digital commerce by supporting customers on buyer/seller applications.

STEP

Reduced Time-to-Market and Scale

Reduced time-to-market and time-to-scale.

STEP

Focus on Niche

Focus on niche areas like consumer or seller acquisition, while other network partners handle different aspects.

STEP

New Opportunities for Start-ups

New opportunities for start-ups to drive innovation in the Commerce value chain.

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SECT

Evangelizing Digital Commerce in India

ONDC supports the transformation of India's digital commerce market through large-scale participation and significant growth.

EVID

Market Transformation Support

ONDC supports the transformation of the ₹2.85 Lakh Crores (USD 38 Billion) Indian digital commerce market.

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CHKL

Envisioned Aspirations of ONDC

ONDC's aspirations include enabling local retail, expanding coverage, formalizing businesses, and enhancing efficiencies.

STEP

Local Retail Ecosystem Access

Enable local retail ecosystems to access and fulfill online demand.

STEP

Easy Business Participation

Enable easy participation in digital commerce for all businesses, regardless of size or location.

STEP

Expand Digital Commerce Landscape

Expand the digital commerce landscape by amplifying geographic and socio-economic coverage.

STEP

Formalize Businesses

Formalize businesses by creating active digital history and enabling easier access to finance options.

STEP

Economic Development and Livelihood Creation

Create economic development and livelihood opportunities across the digital commerce value chain.

STEP

Enhance Business Efficiencies

Enhance business efficiencies through reduction in cost overheads (acquisition, digital presence, inventory costs).

STEP

Increase Local Goods Trade

Enable increased trade of locally manufactured goods, multiplying investment and production of MSMEs.

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INSG

Potential Market Transformation Opportunity

ONDC is expected to fuel significant growth in retail digital commerce over the next 5 years.

DATA

Additional Gross Merchandising Value

Projected additional Gross Merchandising Value of ₹3.75 Lakh Crore.

DATA

Additional Annual Purchases

Projected additional annual purchases enabled by the network: ₹730 Crore.

DATA

Buyers on the Network

Projected 90 Crore buyers on the network.

DATA

Sellers on the Network

Projected 12 Lakh sellers on the network.

DATA

Enhanced Pin Code Coverage

Projected enhanced Pin Code Coverage.

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SECT

Implementing ONDC

ONDC implementation focuses on institutional setup, roles, governance, and a phased strategy for population-scale adoption.

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SUP

Institutional Setup

ONDC must be structured to make quick decisions, build technology, and respond to business needs.

REQ

Experienced Team and Independent Management

ONDC requires an experienced team and independent management empowered for quick, efficient business decisions.

REQ

Financial Independence

The entity needs independent funding and a self-sustaining financial model to support operations and growth.

DCSN

ONDC Incorporated as Section 8 Company

Open Network for Digital Commerce was incorporated on December 30, 2021, as a Section 8 company (not for profit).

EVID

Corporate Governance and Ownership

It has limited liability, sound corporate governance norms, and is majority-owned by private sector institutions for agility.

EVID

Non-Profit Intent

The Section 8 company structure removes profit maximization incentives, retaining its public good intent.

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SUP

Role of ONDC Entity

The ONDC entity is responsible for developmental, network facilitation, and service delivery roles.

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CHKL

Three Roles of ONDC Entity

ONDC entity has three primary roles: developmental, network facilitation, and service delivery.

SUP

Developmental Role

ONDC adopts technology protocols, designs/maintains tech rails, enlists participants, and provides handholding support for adoption.

SUP

Network Facilitation Role

ONDC establishes a 'Network Code of Conduct' with participants, based on consumer protection and fair trade principles.

SUP

Service Delivery Role

ONDC develops and maintains foundational services like registry, certification, and grievance redressal, including reference applications.

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SUP

Governance

ONDC functions under existing regulatory oversight and collaboratively develops a Network Code of Conduct.

EVID

Regulatory Oversight and Code of Conduct

ONDC operates under relevant Ministries' regulatory oversight and establishes a Network Code of Conduct collaboratively.

EVID

Council for Policies

ONDC may establish a council with network participant representation to develop and adopt network policies.

EVID

User Council for Evolution

ONDC will establish a user council of network participants and experts to continuously evolve network rules and policies.

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FRMW

Implementation Strategy

Implementing ONDC at a population scale is a long-term plan, designed to address challenges in trust-building.

RISK

Trust-Building Challenges

ONDC will face challenges building trust among small and large digital commerce companies and managing user expectations.

EVID

Focus Areas for Execution

The implementation strategy focuses on three key aspects: technology, business, and institution building.

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FRMW

Short Term Implementation Strategy

The short-term strategy focuses on rapid rollout, technology development, and ecosystem expansion.

1QCI Project Mode Implementation→2Technology Development for Launch→3Ecosystem Expansion and Onboarding→4In-House Capability Development

STEP

QCI Project Mode Implementation

The ONDC mission team incubated under QCI will implement the network on a project mode.

STEP

Technology Development for Launch

ONDC Registry and Gateway are developed, along with adapter interfaces for rapid deployment and integration.

STEP

Ecosystem Expansion and Onboarding

ONDC will focus on ecosystem expansion, onboarding various network participants, and conducting an IEC campaign.

STEP

In-House Capability Development

ONDC entity will develop in-house capabilities to take over implementation and scale the initiative.

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FRMW

Long Term Implementation Strategy

The long-term strategy involves strengthening ONDC's roles, fostering innovation, and continuous expansion.

1Strengthen Roles→2Innovative Solutions Collaboration→3Refine Rules and Compliance→4Scale Foundational Services→5Expand Across Dimensions→6Develop Communication and Business Models

STEP

Strengthen Roles

ONDC aspires to significantly strengthen its roles in development, network discipline, and service delivery.

STEP

Innovative Solutions Collaboration

ONDC will develop innovative solutions in active collaboration with the network community and start-up ecosystem.

STEP

Refine Rules and Compliance

ONDC will study and refine network rules, establishing strong compliance through automated network policies.

STEP

Scale Foundational Services

ONDC will scale and strengthen foundational services like registries, certification, and grievance redressal to meet growth.

STEP

Expand Across Dimensions

ONDC will continue to expand across different sectors, domains, socio-economic strata, and geographic locations.

STEP

Develop Communication and Business Models

ONDC will continually develop communication to address ecosystem concerns and attractive business models for diverse segments.

▸ 3 Expand

SECT

Appendix

The appendix provides information on the ONDC Advisory Council, supporters, and an invitation for feedback.

EVID

ONDC Advisory Council

The Government of India constituted an advisory council to advise on ONDC's design and adoption.

EVID

Supporters of ONDC

The ONDC initiative is supported by multiple organizations including DPIIT, QCI, and Beckn Foundation.

EVID

Invitation for Feedback

This paper invites feedback from the public and stakeholders on ONDC's functional and technical design and principles.