India Said to Launch Open Network for Digital Commerce to Take on Amazon, Flipkart

India will on Friday launch an open network for digital commerce (ONDC) as the government tries to end the dominance of US companies Amazon and Walmart in the fast-growing e-commerce market, a government document showed.

The launch of the platform comes after India’s antitrust body on Thursday raided domestic sellers of Amazon and some of Walmart’s Flipkart following accusations of competition law violations. The companies did not respond to request for comment on the raids.

Indian retailers, key supporters of Prime Minister Narendra Modi, have long contended that Amazon and Flipkart’s platforms benefit a few big sellers, via predatory pricing, though the companies say they comply with all Indian laws.

The government’s so-called ONDC platform will allow buyers and sellers to connect and transact with each other online, no matter what other application they use. It will be soft-launched on Friday before being expanded, the trade ministry told Reuters.

The government document said that two large multinational players controlled more than half of the country’s e-commerce trade, limiting access to the market, giving preferential treatment to some sellers and squeezing supplier margins. It did not name the companies.

Amazon and Flipkart did not immediately respond to requests for comment on ONDC.

The document said India’s ONDC plan aimed to onboard 30 million sellers and 10 million merchants online. The plan is to cover at least 100 cities and towns by August.

It would focus on apps in local languages for both buyers and sellers, with a special emphasis on small merchants and rural consumers, the document said about the project.

The government said it had already received support from retailers and venture capital firms. Lenders such as the State Bank of India, ICICI Bank and Bank of Baroda have already committed total investments of Rs. 2.55 billion rupees into ONDC.

A Reuters investigation last year, based on Amazon internal documents, showed the company had given preferential treatment for years to a small group of sellers on its platform and used them to bypass Indian laws. Amazon denies any wrongdoing.

© Thomson Reuters 2022