How Open Network for Digital Commerce could disrupt India's e-commerce space

Image credit: The Indian Express

The central government has recently set up an advisory council for Open Network for Digital Commerce (ONDC) to digitise e-commerce value chains, standardise operations, promote inclusion of suppliers, and derive efficiencies in logistics. This is another effort by the government to facilitate the creation of shared digital infrastructure, as it has previously done for identity (Aadhaar) and payments (Unified Payments Interface).

India’s approach of standardising the digital infrastructure layer, either as its creator or facilitator, is unique and offers learnings for other countries. When done well, this approach can level the playing field and create value for users. The e-commerce sector is ripe for such disruption. The market is dominated by a few players who are facing investigations for unfair trade practices in many countries. The sector is characterised by many small players who individually do not have the muscle to have an equitable bargain with e-commerce companies. Economists call this a “market failure”, and it presents a legitimate case for intervention. However, this approach also comes with risks and we should tread with caution. In general, governments should intervene in markets only when there is a clearly identifiable market failure or massive societal benefits from creating shared infrastructure. Moreover, we should design the system such that it has the greatest chance of success. The three “layers” of an open digital ecosystem — tech, governance and community — provide a useful conceptual framework to think of both adoption and safeguards.

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