UPSC Essentials: One word a day – ONDC

Subject: Government Schemes and Policies

Relevance: This term has been in news a lot over the past few months. The latest development has brought it back in news. Aspirants should know the basics and associated terms. Do not forget to solve the MCQ below.

Why in news?

—According to PIB, Union Minister for Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Shri Piyush Goyal called for the integration of One District One Product (ODOP) initiative with Open Network for Digital Commerce (ONDC).

—Earlier, US firm Microsoft has become the first big tech company to join the Open Network for Digital Commerce (ONDC), a government-backed project which is aimed at enabling small merchants and mom-and-pop stores in parts of the country to access processes and technologies that are typically deployed by large e-commerce platforms such as Amazon and Flipkart.

—The software giant intends to introduce social e-commerce — group buying experience — in the Indian market, which would include a shopping app for Indian consumers along with their social circle, harnessing the ONDC network to discover the best pricing among retailers and sellers.

What is Open Network for Digital Commerce (ONDC)?

—It is an initiative aimed at promoting open networks for all aspects of exchange of goods and services over digital or electronic networks. ONDC is to be based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform. It is being developed as a counter to the current duopoly in the Indian e-commerce market which is largely dictated by Amazon and Walmart-owned Flipkart.

—In May this year, the Department for Promotion of Industry and Internal Trade (DPIIT) went live with a test run of ONDC in cities like Delhi-NCR, Bengaluru, Coimbatore, Bhopal, and Shillong where it plans to onboard 150 sellers.

How does ONDC work?

—The ONDC platform lies in the middle of the interfaces hosting the buyers and the sellers. So far, the buyer side interface is being hosted by Paytm, whereas the seller side interface is being hosted by other players like GoFrugal, etc.

—When a buyer searches for an item on the Paytm app, from where ONDC has gone live, the app will connect to the ONDC platform, which will connect it to seller side interfaces that will list all the companies from where you can buy the particular item.

—On ONDC, there will be several other backend partners such as logistics service providers, enterprise resource planners, e-commerce store hosting service providers, etc.

What are the challenges ONDC aims to address?

—An ONDC strategy paper published earlier this year has flagged the rising dominance of global players in India’s e-commerce ecosystem, pointing out that the large quantum of investment required to build competitors to the integrated solutions offered by the big players has become an entry barrier for digital marketplaces.

—It also flagged the inability of marketplace sellers to move out of the platform ecosystem, given that the value created by these small players is stored with the larger platforms. With this in mind, ONDC aims to transform the marketplace ecosystem from an operator-driven platform-centric model to a facilitator-driven interoperable decentralised network.

What is ODOP?

According to the Ministry of Commerce & Industry

—One District One Product (ODOP) is an initiative which is seen as a transformational step forward towards realizing the true potential of a district, fuel economic growth and generate employment and rural entrepreneurship, taking us to the goal of AtmaNirbhar Bharat.

—One District One Product (ODOP) initiative is operationally merged with ‘Districts as Export Hub’ initiative being implemented by DGFT, Department of Commerce, with Department for Promotion of Industry and Internal Trade (DPIIT) as a major stakeholder.

—The Department of Commerce through DGFT is engaging with State and Central government agencies to promote the initiative of One District One Product.

—The objective is to convert each District of the country into an Export Hub by identifying products with export potential in the District, addressing bottlenecks for exporting these products, supporting local exporters/manufacturers to scale up manufacturing, and find potential buyers outside India with the aim of promoting exports, promoting manufacturing & services industry in the District and generate employment in the District.

—To increase exports and take export promotion to the District level, Department of Commerce through the Director General of Foreign Trade (DGFT) is engaging with State / UT Governments to implement the said initiative in all districts of the country in a phased manner, with the objective of mobilizing the potential of each district of the country to achieve its potential as an export hub.

(sources: Why ONDC push could boost small retailers online, PIB)

Point to ponder: Why ONDC push could boost small retailers online?

MCQ:

Consider the following statements and answer the question below:

1. Open Network for Digital Commerce (ONDC) is an initiative aimed at promoting open networks for all aspects of the exchange of goods and services over digital or electronic networks.

2. ‘Districts as Export Hub’ has been replaced by One District One Product (ODOP) initiative.

3. US firm Microsoft has become the first big tech company to join the Open Network for Digital Commerce (ONDC).

Which of the following statements is/are correct?

a) Only 1

b) 1 and 2

c) 1 and 3

d) 1, 2 and 3