What is the ‘Open Network for Digital Commerce’?

What is the ‘Open Network for Digital Commerce’?

What is the ‘Open Network for Digital Commerce’?


  • The existing “platform-centric model to an open-network model” of the e-commerce business is what the government intends to change.
  • The administration is certain that the ONDC will end the dominance of a few major platforms in the e-commerce business.
  • The biggest hurdle for ONDC may be creating a successful marketplace for the exchange of goods and services.

Points to Ponder:

Introduction to ONDC

  • The Indian government has launched an initiative called the ONDC to shift the e-commerce business from a platform-centric approach to an open-network paradigm.
  • It is modelled after the well-known Unified Payments Interface (UPI) project, which enables smooth money transfers across various payment providers.

The objective of ONDC:

  • The government wants to democratise e-commerce and offer substitutes for exclusive e-commerce websites.
  • The objective is to dismantle the monopoly of a few big e-commerce platforms by enabling customers and sellers to trade regardless of the platforms they are registered on.

Government’s Motivation:

  • The government is motivated by its perception that the current state of the e-commerce business is split into silos ruled by private platforms.
  • Food delivery applications have come under fire for charging exorbitant commissions, and marketplaces like Amazon and Flipkart have been accused of favouring specific suppliers in which they have indirect stakes.
  • By connecting buyers and sellers across platforms, the ONDC is viewed as a solution to level the playing field and eliminate the need for proprietary platforms.

ONDC criticisms: 

  • Detractors claim that there is little certainty about the advantages of an open network for digital trade.
  • Buyers frequently browse across platforms, and sellers are already allowed to post their goods on different sites.
  • Private services that assist consumers make smarter selections already fill the information gap, such as price comparison websites.
  • Platforms like Amazon and Flipkart might not only be dominant because of captive grip, but also because of competition and limited monopolies.

Challenges for ONDC:

  •  As ONDC is implemented, the government’s capacity to develop a productive substitute for e-commerce platforms will be put to the test.
  • A seamless marketplace and the capacity to list the products offered by different merchants will be essential.
  • E-commerce platforms spend on exclusive onboarding and listing procedures, and the quality of services may suffer if the open network’s restrictions prevent platforms from reaping the benefits of such investments.
  • A major difficulty for ONDC is creating a productive marketplace for the exchange of goods and services.