ONDC may Catalyze India’s Supply Chain Dreams

India could boast of a far more efficient and robust supply chain system based on the capabilities of the Open Network for Digital Commerce (ONDC) and the Account Aggregator system that are currently in various stages of build and operation. However, it may take up to five years before the system takes off in a big way. 

Making this prediction, Nandan Nilekani, the Infosys Chairman and the brains behind the India Stack idea that delivered Aadhar, UPI and now ONDC, says while ONDC provides the infrastructure to unbundle the supply chain, the account aggregator would provide formal credit so that supply chain operators will not need to rely on the guy above for funds. 

He made these observations during an interview with MoneyControl earlier this week. However, Nilekani added a word of caution that these systems would require up to five years before the truly efficient supply chain was in place. 

Nilekani feels that the five-year timeframe was necessary for the ONDC-AA model to take off in a big way because past experience tells us that it takes a few years to get the building blocks up in place post which the market forces or sometimes a black swan event arrives to provide the necessary wind beneath the wings. 

ONDC is an idea whose time has come

Asked about the progress on ONDC, which is setting up protocols that could potentially provide every business owner with a level playing field to expand their footprint through eCommerce, he said there is natural demand for the network, which means it’s an idea whose time has come. 

Everyone wants to be a part of the network and small retailers believe that it would provide them with the right opportunity to participate in global digital commerce. “It is going to give a big boost to hyperlocal commerce and quick commerce,” Nilekani said. 

He said suppliers are finding that ONDC makes it easier as they can list their product on the network that can be accessed via any consumer app. As for delivery companies, they would get a larger number of packages to deliver, so everybody wins, he said, adding that it will be a high volume, loc cost, low transaction fee kind of model. 

Of course, the momentum may be with ONDC and AA, but there’s lots to be accomplished. While ONDC is beta-testing in over 50 districts, the AA ecosystem has on-boarded some PSU banks after several private sector banks went live on it. Reports suggest that as on date, there are a billion accounts on the AA framework. 

Meanwhile, Walmart-owned PhonePe has set its sights on launching a consumer facing app on ONDC to deliver groceries. The app, being piloted in Bengaluru, will seek to tie-up with delivery companies that includes Flipkart Quick while targeting the likes of Zepto, Blinkit and Swiggy Instamart for the initial orders.

The company aims to play the role of a buyer and seller app on ONDC and is targeting grocery and food and beverages in the first phase of its launch in Bengaluru. Earlier this month, Sameer Nigam, the founder-CEO of PhonePe told ET that the company earmarked $15 million for its entry on to the ONDC network, and will deploy the funds over the next 18 months.