India Said to Be in Talks With Banks, Agencies for E-Commerce Platform ONDC

ONDC, the federal government’s effort to interrupt Amazon and Walmart’s dominance of its e-commerce sector, by establishing its personal open community, has begun lining up banks and different key gamers wanted to maneuver it ahead, sources conversant in the matter stated.

Some of the nation’s greatest banks are in discussions about organising “buyer platforms” to let their clients place orders for items and companies over the Open Network for Digital Commerce (ONDC), which the federal government soft-launched in April, the sources informed Reuters.

The success of the community, which might promise equal entry to all on-line sellers and consumers no matter their dimension, is a precedence for Prime Minister Narendra Modi, who faces strain from small companies to behave towards the outsized affect of Amazon and Walmart’s Flipkart in India’s e-commerce.

Policymakers in different international locations as effectively are taking a look at methods to rein in huge tech corporations’ dominance of on-line purchases.

“If you look at the seller side, anybody who can make their digital catalog visible using this common language will have access to a large pool of buyers shared across apps,” ONDC Chief Executive T. Koshy stated concerning the community. “It is no longer controlled by one large corporation.”

Koshy stated he had held talks with banks, enterprise capitalists and telecoms corporations, however declined to call them or to touch upon how far the discussions had progressed.

Indian e-commerce was value greater than $55 billion (roughly Rs. 4,26,700 crore) in gross merchandise worth in 2021 and can develop to $350 billion (roughly Rs. 27,15,100 crore) by the tip of this decade, in keeping with authorities estimates. Amazon and Flipkart management greater than 60 p.c of that market, which now accounts for about 8 p.c of shopper purchases in a rustic of 1.35 billion individuals.

ONDC goals to cowl a minimum of 100 cities and cities by August, with a goal of signing up 900 million consumers and 1.2 million sellers in 5 years.

Bank of Baroda’s chief digital officer, Akhil Handa, stated his financial institution was in talks concerning the mission but it surely was too early to speak about particular use circumstances.

“This certainly has the potential to be the next big thing,” he stated.

State Bank of India, Axis Bank, Punjab National Bank, ICICI, HDFC, Kotak Mahindra and IDFC First are amongst different lenders in discussions with ONDC to arrange purchaser platforms, three sources conversant in the matter informed Reuters. They spoke on situation of anonymity as a result of they weren’t authorised to talk to the media.

Kotak stated it had invested in ONDC with the idea that the mission would “redefine digital commerce in the country”. It didn’t touch upon purchaser platforms.

The different banks didn’t reply to requests for remark.

The platforms would permit the banks to drive use of their playing cards, loans, and different companies, the sources stated.

The banks and different monetary establishments had already dedicated to a mixed preliminary funding of Rs. 255 crore within the ONDC mission.

While the mission is transferring ahead, nonetheless, there have been doubts whether or not it will diminish the presence of Amazon and Flipkart.

“The network is not about every small player colluding to make a big company like Amazon irrelevant,” stated Pranav Pai, managing companion at 3one4 Capital which invests in start-ups.

“Factors like loyalty and trust for Amazon’s fulfilment services will still play a part in consumer choices online.”

Amazon and Flipkart didn’t reply to requests for remark.

Venture capital corporations Accel and Sequoia are additionally in talks about doubtlessly investing in start-ups that may be a part of ONDC, one of many sources stated. Telecom corporations Bharti Airtel and Vodafone Idea are in discussions on how they might utilise the community, two of the sources stated.

The corporations didn’t instantly reply to requests for remark.

Reuters reported final week that Alphabet’s Google was additionally in talks with ONDC, whereas Paytm, India’s main fintech firm, had already joined.

© Thomson Reuters 2022