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SIDBI & ONDC Ink MoU to Accelerate E-Commerce for Small Industries; Microsoft Joins ONDC to Launch E-Commerce App for India

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SIDBI, ONDC ink MoU to accelerate e-commerce for small industries

Small Industries Development Bank of India (SIDBI)and Open Network for Digital Commerce (ONDC), a pioneering initiative to democratize India’s e-commerce ecosystem, have signed a Memorandum of Understanding (MoU) to coordinate the operations of institutions involved in related endeavours.

  • The collaboration aims to transform the landscape of Micro, Small, and Medium Enterprises (MSMEs) by integrating them into the ONDC network and accelerating their participation in e-commerce.

The agreement was signed by Sivasubramanian Ramann, Chairman & Managing Director (CMD), SIDBI, and T Koshy, MD & CEO, ONDC.

What is ONDC?

i.ONDC is an open protocol network that will allow any network-enabled application to identify and engage in local commerce across categories such as mobility, grocery, food ordering and delivery, hotel booking, and travel, among others.

  • The platform intends to offer new opportunities, eliminate digital monopolies, and assist MSMEs and small traders in getting on online platforms.
  • It is an initiative of the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry (MoCI).

ii.The pilot phase of India’s own ONDC, a UPI-type protocol, was introduced in five cities in April 2022: Delhi National Capital Region (NCR), Bengaluru (Karnataka), Bhopal (Madhya Pradesh), Shillong (Meghalaya), and Coimbatore (Tamil Nadu).

iii. A nine-member advisory council, including of Nandan Nilekani from Infosys and RS Sharma, CEO of the National Health Authority, has been established by the government to advise on the mechanisms needed to design and hasten the adoption of ONDC.

Key Points:  

i.The collaboration between ONDC and SIDBI will provide a programmatic approach for MSMEs, wherein sessions will be arranged to educate them about ONDC, masterclass sessions on ONDC protocol and MVP definition.

  • It will be followed by incentive acceleration programmes before participants and their ecosystems go live and may transact.

ii.SIDBI will harness its ties with leading MSME industrial clusters in India to ensure the success of this national initiative, beginning with Morbi in Gujarat, Coimbatore in Tamil Nadu, and Ludhiana in Punjab for engagement with ONDC.

  • Three partners are being introduced to ONDC: Annapurna Finance Pvt. Ltd. in Bhubaneswar (Odisha), Access Livelihoods Group in Hyderabad (Telangana), and the women’s cooperative “Looms of Ladakh.”

Microsoft Joins ONDC to Launch E-Commerce App for India
Microsoft has joined the ONDC platform as the first significant technology company, with the intention of introducing social e-commerce to the Indian market.

  • Further, it will launch a shopping app in India that would be accessible via the ONDC network and enable customers to discover the best price offered by retailers and sellers.

India’s E-Commerce Market:

i.India’s e-commerce market has experienced exceptional growth, specifically after the COVID-19 pandemic compelled firms and customers to transact online.

ii.According to a survey released in August 2022 by the Indian Brand Equity Foundation (IBEF), India’s e-commerce market is projected to grow from USD 46.20 billion in 2020 to USD 111.40 billion by 2025, growing at a Compound Annual Growth (CAGR) of 19.24%.

iii. The Indian e-commerce sector is projected to reach USD 400 billion by 2030, growing at a rate of 19% CAGR.

Key Points:

i.ONDC’s UPI-like digital commerce network will help both buyers and sellers by empowering them to connect without relying on any e-commerce solution.

ii.Smaller merchants and enterprises have benefited from large e-commerce firms’ assistance in digitizing their inventory and selling online.

  • Amazon announced in May 2022 that in the last nine years, it had digitised over 40 lakh MSMEs and created over 11.6 lakh direct and indirect jobs.

About Small Industries Development Bank of India (SIDBI):

CMD – Sivasubramanian Ramann
Establishment – 1990
Headquarters – Lucknow, Uttar Pradesh