Context: The government-backed Open Network for Digital Commerce (ONDC) has announced that its MD and CEO, T Koshy, has stepped down following the completion of his three-year tenure at the company.

Meaning of the context: ONDC offers small retailers an opportunity to provide their services and goods to buyers across the country through an e-commerce system, where buyers are able to purchase products that are sold on any platform. It is not an application, platform, intermediary or software but a set of specifications designed to foster open, unbundled, and interoperable open networks.

Learning Zone:

• The Open Network for Digital Commerce (ONDC) is an innovative, government-backed initiative launched by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, to democratize e-commerce in India. 
• Incorporated on December 31, 2021, as a Section 8 non-profit company, ONDC aims to shift e-commerce from a platform-centric model to an open-network model.

Key Features:

• Open-Source Protocols: Uses open specifications and network protocols, independent of specific platforms, similar to HTTP (web), SMTP (email), or UPI (payments).
• Interoperability: Allows a buyer on one platform (e.g., Amazon) to purchase from a seller on another (e.g., Flipkart) without needing to register on both.
• Network-Centric Model: Unlike platform-centric models, ONDC connects Buyer Applications, Seller Applications, and Gateways for seamless transactions.
• Standardized Operations: Protocols for cataloguing, inventory management, order fulfillment, and vendor discovery ensure uniformity.
• Inclusivity: Empowers small businesses by providing access to digital commerce without high platform commissions.

Objectives

• Democratize E-Commerce: Reduce dominance of large platforms (e.g., Amazon, Flipkart) and curb digital monopolies.
• Promote Inclusivity: Enable MSMEs, small retailers, and local businesses to compete in the digital marketplace.
• Enhance Consumer Choice: Allow buyers to access a wider range of sellers, products, and services across platforms.
• Cost Efficiency: Lower transaction costs by reducing platform fees (e.g., ONDC’s food delivery fees are ~20% of those charged by Swiggy/Zomato).
• Drive Innovation: Foster a competitive ecosystem through open-source collaboration.

Source : Business Standard