Nandan Nilekani Is Building ONDC To Curb Amazon-Flipkart Dominance In Ecommerce

With the astounding growth of ecommerce in India, concerns have been raised regarding the dominance of deep-pocketed players such as Amazon and Flipkart innumerable times over multiple platforms. The duopoly in the ecommerce segment has been often questioned by small retailers, merchants to multiple traders’ bodies. Now, Nandan Nilekani, cofounder of software powerhouse Infosys Ltd, is leading a project, Open Network for Digital Commerce (ONDC), that is aimed at creating a level playing field for small players.

“ONDC is an idea whose time has come,” Nilekani said earlier. Last year, the project was announced by the Indian government. ONDC is an open-source ecommerce platform that allows all buyers and sellers to transact regardless of the platforms where they are registered. 

The project is a brain-child of Piyush Goyal-led Department for Promotion of Industry and Internal Trade (DPIIT). Formed on December 31, 2021, ONDC has been incorporated as a private sector-led non-profit company.

Nilekani is helping to build the open technology network. He also earlier helped the government develop the Aadhar biometric ID system.

With this project, the government aims to democratise digital commerce, moving it from a platform-centric model to an open network.“We owe it to the millions of small sellers to show an easy way to participate in the new high-growth area of digital commerce,” Nilekani said recently as quoted in media reports.

The new network is expected to be rolled out very soon to select users in five cities including Delhi, Bengaluru, Coimbatore, Bhopal, and Shillong. 

“We have identified five cities, as we wanted to keep a geographical spread across the board. We have a trader base in these five cities which is getting prepared on the intricacies of transacting on ONDC,” Anil Agrawal, additional secretary of DPIIT, said.

To bolster the project, major banks have also come forward to invest in it. State Bank of India (SBI), recently picked up a 7.84% stake in the newly announced initiative for INR 10 Cr. Earlier, Kotak Mahindra, HDFC and Axis Bank also picked up a stake in the ONDC for an amount of INR 10 Cr each. 

The equity ownership was aimed at providing an open public digital infrastructure to develop and transform the Indian digital commerce ecosystem for both goods and services, SBI said in a regulatory filing.

According to a 2021 report by Bain & Company, India is home to the world’s fourth largest retail market in the world, pegged at around $810 Bn. In addition, the addressable ecommerce market in the country to reach the $200 Bn mark by 2026, as per an Inc42 report. 

Considerably, a draft ecommerce policy which was announced in July last year, has been in the works for sometime now. The draft rules attempted to crack down on ecommerce platforms over flash sales, along with bringing restrictions in many other areas.