Open Network for Digital Commerce (ONDC) has signed a Memorandum of Understanding (MoU) with the Small Industries Development Bank of India (SIDBI).
The collaboration of SIDBI, the principal financial institution established for the promotion, financing, and development of the Micro, Small, and Medium Enterprise (MSME) sector, and ONDC, a first-of-its-kind initiative to democratise the country’s e-commerce ecosystem, is to benefit the country’s MSME segment from ONDC’s digital network.
The MoU, signed between Sivasubramanian Ramann, CMD, SIDBI, and T Koshy, MD&CEO, ONDC, calls for SIDBI and ONDC to work together on a number of initiatives to support MSMEs’ access to open network e-commerce platform proposed by ONDC.
By bringing MSMEs into the ONDC network and boosting their participation in e-commerce, the collaboration aims to transform the MSMEs market.
Sharing his views, T. Koshy, MD & CEO, ONDC, said, “We are building a network of networks and through this MoU, we will connect the SIDBI network with ONDC, which will revolutionise the ecosystem of small industries. This initiative will be a driving force to initiate the participation of the small industries across the country onto e-commerce on a larger scale and enable their growth.”
The partnership between ONDC and SIDBI hopes to create a programmatic approach for MSMEs, starting with educating the segment about ONDC and its protocol, MVP definition, and finally the participants and their ecosystems’ going live and being able to transact.
Commenting on the collaboration, S. Ramann, CMD, SIDBI, said, “SIDBI is very keen to ensure the success of this important national initiative and it will leverage its strong relationships with all major MSME industrial clusters in the country starting with Morbi, Coimbatore, and Ludhiana for engagement with ONDC. SIDBI will also facilitate the engagement of ONDC with its network of partner grassroots agencies, inter-alia, working for market access to informal enterprises. Three partners being introduced to ONDC are Annapurna Finance Pvt. Ltd, Access Livelihoods Group, and the women’s co-operative ‘Looms of Ladakh’. SIDBI will also use its strong presence in the fintech ecosystem to explore e-commerce embedded financing solutions.”
The 2021-established digital commerce company is an initiative of the Department of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, Government of India. It was designed to develop a model that would facilitate the revolutionisation of digital commerce and further the penetration of retail e-commerce in India.
ONDC is a set of specifications designed to foster open, unbundled, and interoperable open networks, thereby eliminating the dependency on a single platform. It aspires to democratise and decentralise e-commerce, increase access and inclusion for sellers, particularly small and medium-sized enterprises and local businesses, and give customers more choices and independence.
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While the principal financial institution, SIDBI was set up under an Act of Parliament. Through credit and, more importantly, credit plus activities, SIDBI has played a significant role in a number of initiatives for the development of the MSME sector throughout the years.