Editorial 1: Sarkar and Bazaar
Context:
- Recently, Centre directed the e-commerce companies and food delivery players to join the government-backed Open Network for Digital Commerce (ONDC).
About ONDC:
Open Network for Digital Commerce (ONDC), is a private non-profit company established under Companies Act 2013 established by the Department for Promotion of Industry and Internal Trade (DPIIT) of Government of India to develop open e-commerce.
- It was incorporated on 31 December 2021 with initial investment from Quality Council of India and Protean eGov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited).
- It is based on open-sourced methodology, using open specifications and open network protocols independent of any specific platform.
- ONDC is not an application, an intermediary, or software, but a set of specifications designed to foster open interchange and connections between shoppers, technology platforms, and retailers.
Need for ONDC:
- During the Covid-19 pandemic, there was a “huge disconnect” between the scale of online demand and the ability of the local retail ecosystem to participate.
- Digital Divide as Small local retailers could not take advantage of the digital platform.
- Lack of level playing field in the e-commerce because of the platform centric model.
- The market is dominated by a few players who are facing investigations for unfair trade practices in many countries.
Aims and Objectives of ONDC:
- ONDC is built to promote open networks for all aspects of exchange of goods and services over digital or electronic networks.
- It is globally first-of-its-kind initiative that aims to democratise Digital Commerce, moving it from a platform-centric model to an open-network.
- like Amazon and Flipkart to capture the US$810 billion domestic retail market led to its creation.
The ONDC network is composed of five types of Network Participants that work together:
- Buyer Apps: These are consumer-facing apps. Their key function is to connect buyers with every seller on the ONDC network.
- Seller Apps: Seller apps are the apps that merchants and service providers interface with to access every buyer on the network.
- Technology Service Providers (TSP): TSPs are the technology backbone of end-user facing apps on the buyer and seller side. They provide services like digitizing catalogs, network analytics, vertical integration of accounting, CRM, and other tools.
- Logistics Providers: Logistics providers take delivery requests from sellers and fulfill them. They are the real-world connective bridge between buyers and sellers.
- Online Dispute Resolution (ODR) Providers: In a world where no one central authority is in charge of governance, ODRs take up the mantle of resolving disputes, refunds, and returns.
Status and Potential of Indian Retail Market:
- Penetration of e-commerce is around 6 per cent of total retail in India.
- About 63 million small businesses drive over 90% of commerce in India.
- India’s e-commerce market is growing rapidly, and is expected to reach $163 billion in the next three years from $63 billion now.
- Some (conservative) estimates indicate that the ONDC Network could add 60-80 billion USD to India’s economy by 2030.
- ONDC is a population scale network where more than $100B of commerce is expected to happen with more than 500 million customers and 15 million sellers.
Advantages of ONDC:
- Some hailed the move as the ‘UPI-moment’ of e-commerce’ contributing to efforts of creating digital public infrastructure for India.
- ONDC is designed to keep check on Big Tech Companies from violating Consumer Protection (E-Commerce) (Amendment) Rules, 2021.
- It will prevent concentration of market power by integrating them into an open-source decentralized network where data portability will break data silos while data interoperability will allow innovation.
- Comfort to India’s trader community which has felt insecure by the proliferation of e-commerce led by foreign money.
- ONDC is inclusive and not an upfront competitor for any e-commerce portal. It will allow every player to co-exist in the market.
- It will make eCommerce more inclusive for tier-2/3 cities.
- It will be empowering MSMEs to target more customers with same-day delivery options.
- Technological self-reliance through unique digital infrastructure for India and a standard for the world.
- While the ONDC API Specifications are a Digital Public Good for the globe, the ONDC Network is Digital Public Infrastructure intended mainly for India.
- Ensure proper competition and pricing and access to the subscriber base in the market, creating value for users.
- It will create a level playing field mainly from small retailers and lower the barrier of entry and discovery online,
- It will help adoption of open digital ecosystem across key sectors.
- Most investment companies have started asking start-ups they are looking to invest in about their strategy to join ONDC.
Issues of Concern:
- It is far more complex than UPI as UPI loop closes the moment a transaction is completed. But in ONDC, the loop is much longer – you buy which needs to be delivered offline, along with mechanism for returns, grievance redressal.
- Unlike UPI, which the government has consistently funded, ONDC stakeholders are banks and financial institutions, and it is unlikely to receive similar financial or policy support.
- In a marketplace business, sellers are independent – the FDI policy for e-commerce also requires that. Without the concurrence of sellers, a marketplace model like that of Amazon and Flipkart, cannot join a network like ONDC.
- Some other big ones such as Amazon and Swiggy have chosen to stay away so far.
- Also, democratising e-commerce may not be realized as, users are likely to buy goods and services from the brands they are aware of and may give a miss to local sellers.
- Many companies are not joining with their existing client-base, which will circumvent the idea of inclusion.
- Some players like Flipkart and Zomato are trying to set up step down subsidiaries to join.
- There are doubts on efficiency of the government-backed entity can match efficiencies of a streamlined e-commerce operation with a service interface that has multiple moving parts – from order to delivering goods, and from handling returns to grievances.
- It may lead to squeezing of margin due to a monopoly-like structure in many e-commerce domains.
Steps Taken:
- Advisory council for Open Network for Digital Commerce (ONDC) has beeb set up to digitise e-commerce value chains, standardise operations, promote inclusion of suppliers, and derive efficiencies in logistics.
- ONDC is onboarding partners on both buyer and seller side as it had announced plans to be in 75 cities this month and expand into categories like electronics, fashion and others.
- Yes Bank Partnered with SellerApp to facilitate adoption of ONDC
- ONDC will be assigning a Grievance Redressal Officer (GRO) and escalating it to an ODR like Presolv360 in case the grievance is not resolved in 7 days.
- ONDC will be Information Technology Act, 2000 compliant and designed for compliance with the emerging personal data protection bill.
- The government will establish an independent regulatory authority for e-commerce like Sebi.
Way Forward:
- The three “layers” of an open digital ecosystem — Tech, Governance And Community — provide a useful conceptual framework to think of both adoption and safeguards.
- The “tech layer” should be designed for minimalism and decentralisation.
- If possible, the government should restrict its role to facilitating standards and protocols that provide open access, and in getting them adopted organically.
- If built, the platform should be built on “privacy by design” principles.
- Tools like blockchain could be used to build technical safeguards that cannot be overridden without active consent.
- The “governance layer” around this should allay business fears of excessive state intervention in e-commerce.
- Any deployment of standards or tech should be accompanied by law or regulation that lays out the scope of the project.
- Finally, a “community layer” can foster a truly inclusive and participatory process. This may be achieved by making civil society and the public active contributors.
- For example, making recordings or minutes of the meetings of this committee public, and seeking wide feedback on drafts of the proposal.
- Once the framework is implemented, ensuring quick and time-bound redressal of grievances will help build trust in the system.
- The “tech layer” should be designed for minimalism and decentralisation.
- Incentivise the adoption of ONDC by creating non-mandatory “reference applications”, and financial or non-financial incentives.
- Useful learnings can be drawn from the adoption of UPI: The government supported the rollout of BHIM as a reference app, and offered financial rewards through a lottery scheme to drive early adoption.
Conclusion:
ONDC is a unique confluence of technology, policy, and entrepreneurship. Lessons from UPI and the pandemic-driven push for digitization gave birth to ONDC which can become the next great startup catalyst. This rise in GDP can significantly help achieve India’s goal of becoming a $5Trillion economy by 2024. However, the principles of the open-source movement must be adhered to— transparency, collaboration, release early and often, inclusive meritocracy, and community. By creating startups and employment and competitive market, it will also help boost the MSMEs and retail market and better standard of living of the people.
Basic information:
Quality Council of India 1997
- QCI was set up in 1997 by the government of India jointly with Indian industry (represented by CII, FICCI and ASSOCHAM) as an autonomous body under the administrative control of the department.
- QCI establishes and operates the National Accreditation Structure for conformity assessment bodies; providing accreditation in the field of education, health and quality promotion.
Consumer Protection (E-Commerce) (Amendment) Rules, 2021
- New e-commerce rules restrict players from selling the products of companies in which they have a stake and capping the percentage of inventory that a vendor can sell through a marketplace entity (IT platform of an e-commerce entity) or its group companies.
- Also, it curbs the practice of deep discounts, the government said they cannot directly or indirectly influence the price of goods and services, and also brought in a new set of rules that bar the sale of products exclusively in one marketplace.
Unified Payment Interface 2016
- Unified Payments Interface (UPI) Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
- It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.
Editorial 2: Impunity in the Northeast
Context:
- The Centre’s refusal to grant sanction to prosecute 30 army personnel charged with killing 14 young unarmed men in a failed counter-insurgency operation in Nagaland in December 2021 goes against landmark Supreme Court verdicts.
State of violence by the armed forces in Northeast:
- On 2 November 2000, in Malom, a town in the Imphal Valley of Manipur, ten civilians were shot and killed while waiting at a bus stop. The incident, known as the "Malom Massacre", was allegedly committed by the Assam Rifles, one of the Indian Paramilitary forces operating in the state.
- In a writ petition filed in the Supreme Court in 2012, the families of victims of extra-judicial killings alleged 1,528 fake encounters had taken place in the state from May 1979 to May 2012. The Supreme Court set up a commission to scrutinise six of these cases, and the commission found all six to be fake encounters.
- Special Investigation Team (SIT) investigation report of 2022 on the Mon Killings, named 30 Army Personnel, including a Major as accused with required murder charges. It concluded that innocent minors were shot at with a clear intention to kill. But charges could not be framed due to refusal to accord sanction of prosecution by the government.
Guidelines by the Supreme Court:
- In Extra Judicial Execution Victim Families Association case 2016, the apex court held that if an offence is committed by army personnel, there is no concept of absolute immunity from trial by the criminal court constituted under ordinary law..
- “The criminal court under the CrPC could also try the alleged offender in certain circumstances,” the Court ruled.
- The Court held that every instance of the use of excessive or retaliatory force by army personnel needs to be probed. If there is a prima facie case against army personnel, strict penal action needs to follow.
- Court also ruled that over 1,500 cases of alleged fake encounters in Manipur, over the last 20 years, “must be investigated”.
- In Naga People’s Movement of Human Rights case 1997, a constitution bench mandated a thorough inquiry into every serious complaint of misuse or abuse of powers under the Armed Forces Special Powers Act (AFSPA), 1958.
- The Court held, “If it is found that there is substance in the allegation, the victim should be suitably compensated by the State and the requisite sanction under Section 6 of the Act should be granted for instruction of prosecution and/or a civil suit or other proceedings against the person/persons responsible for such violation.”
Steps Taken:
- AFSPA was revoked from Tripura, Meghalaya and Mizoram but it remains in force in Nagaland, Manipur, Assam, J&K, and parts of Arunachal Pradesh.
- The SIT has investigated 39 cases involving deaths of 85 civilians so far, and filed the final reports in 32 cases. While 100 Manipur police personnel have been indicted, no action has been taken against Assam Rifles personnel with the exception of the Khan killing.
Way Forward
- Safeguards within the Act: While the Act gives powers to security forces to open fire, this cannot be done without prior warning given to the suspect.
- The Act further says that after any suspects apprehended by security forces should be handed over to the local police station within 24 hours.
- It says armed forces must act in cooperation with the district administration and not as an independent body.
- Cooperative Federalism: While the Act empowers the Centre to unilaterally take a decision to impose AFSPA, this is usually done informally in consonance with the state government.
- Respect to the peaceful protest by Irom Sharmila: In 2000, the activist Irom Sharmila began a hunger strike that would continue for 16 years against AFSPA in Manipur.
- Justice Jeevan Reddy Committee 2004 recommended the repeal of AFSPA and called it “highly undesirable”, and held that it had become a symbol of oppression.
- Second Administrative Reforms Commission (ARC ) 2007 endorsed these recommendations.
Basic Information:
Armed Forces Special Powers Act (AFSPA) 1958
- The British colonial government had on 15th August, 1942, promulgated the Armed Forces Special Powers Ordinance to suppress the Quit India movement.
- It was the foundation for four ordinances, including one for the “Assam disturbed areas” invoked in 1947 to deal with Partition-induced internal security challenges.
- The Armed Forces (Assam and Manipur) Special Powers Act, 1958, followed the Assam Disturbed Areas Act of 1955 to deal with the uprising in the Naga Hills and adjoining areas.
- The Act was replaced by the AFSPA for wider application. A similar Act specific to Jammu and Kashmir was enacted in 1990.
- AFSPA gives sweeping powers to the armed forces.
- For example, it allows them to open fire, even causing death, against any person in contravention to the law or carrying arms and ammunition.
- Also, it gives them powers to arrest individuals without warrants, on the basis of “reasonable suspicion”, and search premises without warrants.
- It can be imposed by the Centre or the Governor of a state, on the state or parts of it, after these areas are declared “disturbed’’ under Section 3.