The government’s initiative ONDC is providing a huge platform for growth of four key sectors, including financial services, agriculture, manufacturing, and ecommerce retail, a Deloitte report said on Thursday.
The Open Network for Digital Commerce (ONDC) is an initiative of the commerce and industry ministry to create a facilitative model to help small retailers take advantage of digital commerce.
It is not an application, platform, intermediary, or software but a set of specifications designed to foster open, unbundled, and interoperable open networks. The network aims at helping MSME players in the retail sectors to take advantage of the fast-growing ecommerce space in the country.
The report said that the ONDC presents an opportunity for financial institutions to engage with the MSMEs segment that is mainly dependent on government schemes and non-baking financial companies (NBFCs) for credit as they are not deemed creditworthy by mainstream financial institutions.
The size of lending does not make it profitable for financial institutions to lend to this sector, and the lack of data related to MSMEs has meant that credit approvals, based on traditional decisioning models in most instances, get rejected.
“The ONDC ecosystem is expected to digitise the data available on SMEs (using the transaction data) with the help of financial technology services providers… The digitised data will enable financial institutions to develop better understanding of this client segment to tailor products and services,” the report/whitepaper titled ‘commerce@Bharat: Redefining business models and supply chain’, said.
It added that the increased adoption of ONDC in smaller cities and rural areas will open newer segments for banks and also drive tailored products and services catering to this segment’s needs.
“The MSME segments have been traditionally dominated by regional players. ONDC opens up opportunities for digital-savvy financial institutions to cater to the segment,” it said.
A recent report by the Reserve Bank of India (RBI) committee on MSMEs stated that the sector has an estimated credit gap of Rs 20-25 lakh crore.
About the manufacturing sector, the report said that the manufacturing environment has become more challenging during and after the COVID-19 pandemic with geopolitical tensions leading to changes in the trade landscape, supply chain disruptions, and component shortages and volatile commodity prices.
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“ONDC is likely to enable the manufacturing community to tap some of these opportunities and address challenges across the value chain,” it said, adding, with the availability of a large pool of logistics service providers on ONDC, organisations can optimise overall logistics cost and manage demand increase more effectively.
The network will help manage supply chain disruptions in the manufacturing sector as on ONDC, the original equipment makers can quickly identify alternative supply sources at competitive prices from an extensive pool of suppliers and order the component to ensure zero disruption in manufacturing operations.
It also said that with the increasing importance of online sales, the retail ecosystem (brands, retailers, distributors, suppliers) can use the network to connect within their ecosystem and with end consumers.
Over the past few months, categories such as grocery, food delivery, home and decor, electronics, fashion and lifestyle, beauty and personal care, and pharmaceuticals have been leveraging the ONDC network with support of multiple stakeholders.
“ONDC creates an opportunity for brands/retailers/MSMEs to efficiently and cost-effectively address their demand and supplier connect. There are exciting possibilities in both B2B and B2C commerce,” it said, adding brands and retailers can use this network by onboarding their physical outlets and distribution points/warehousing.
It added that the network can support brands to connect directly with their retailers and/or enable their distributors to expand their reach and coverage.
They can also provide features and services such as 24×7 ordering, next-day delivery, auto ordering, and credit management to their sales partners, the report said.
It added that the ONDC can also offer brands/retailers to expand their supplier base and reduce cost of procuring raw materials or manufacturing products.
Further, about the agriculture sector, it said ONDC will provide an opportunity to accelerate technology adoption in agriculture throughout the country as it can integrate both buyers and sellers across the farm value chain onto a single network.
“The network might come as a boon for agritech startups that face the challenge of discoverability. FPOs will get access to input, technology, equipment, and services from companies and government bodies,” it said.
Commenting on the report, Sathish Gopalaiah, President, Consulting, Deloitte South Asia, said that ONDC is a remarkable opportunity for India’s economy spanning diverse industries.
“With a unique proposition built around agility, security, and profitability at the same time, ONDC streamlines value chains, bridges gaps, and endorses innovation, paving the way for the next generation to explore novel paths,” he added.
Edited by Kanishk Singh
