ONDC has democratized e-commerce, expect hockey stick growth: CCI member Anil Agrawal

By establishing an open digital commerce network (ONDC), India is giving smaller e-commerce companies a fair chance to compete with larger players, said Anil Agrawal, member of the Competition Commission of India (CCI).

Commenting on the fees charged and money spent by users and retailers on large technology platforms such as Google, Amazon and Meta, Agrawal stated that while the Commission is investigating these complaints, ONDC – the open e-commerce network connecting buyers, platforms and retailers: helps level the playing field.

“As a country, we have done this to look at these abuses by these dominant players (and) we have gone well beyond the remedies with ONDC,” he said during a fireside chat with Shradha Sharma, founder and CEO, Your story at TechSparks Bengaluru 2024.

The idea behind ONDC is to leverage India’s innovation potential and democratize the e-commerce ecosystem, Agrawal explained. The network achieves this by separating four key aspects of an e-commerce transaction: buyer, seller, payment and logistics.

“When you separate them and make them interoperable like HTTP or SMTP… similarly, we created ONDC based on the Beckn protocol… these four separate entities can talk to each other and transact. This is a fundamental revamp of e-commerce,” Agrawal said.

The Beckn Protocol is an open and interoperable protocol for decentralized digital e-commerce. It can be extended to sector-specific applications such as mobility and was used to build the Namma Yatri app.

Although the ONDC pilot phase began in April 2022, the network went mainstream in January 2023, recording 1,281 transactions. In August 2024, it recorded 12.5 million transactions per month.

While ONDC may not be seeing much traffic from the big players yet, Agrawal noted that it is enabling many smaller sellers.

“I think the potential of ONDC is limitless. ONDC has achieved critical mass and I see it continuing to grow exponentially,” he said, adding that anyone who pays through UPI is a potential customer for ONDC merchants as the network has multiple payment wallets.

ONDC is an initiative of the Department for the Promotion of Industry and Internal Trade (DPIIT) of the Ministry of Commerce. Prior to joining CCI, Agrawal was a member of the ONDC Advisory Board at DPIIT.