Policy Wrap: ONDC set to disrupt B2B digital commerce, India's DPI will be key in India’s digital journey, Over 10 billion UPI transactions recorded in August, and more
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INDIAN ECONOMY
ONDC set to disrupt B2B digital commerce across retail, financial services, manufacturing, and agricultural sectors
The Open Network for Digital Commerce (ONDC), particularly in the retail, financial services, manufacturing, and agricultural sectors, is poised to disrupt B2B digital commerce.
ONDC seeks to democratise the e-commerce market by building an open marketplace for small and medium-sized businesses. As long as both the buyer and the seller's platforms are connected to the ONDC network, they can trade even though they are on different platforms.
Small and medium-sized firms (SME) and empowered consumers will characterise India's forthcoming growth phase, which is consistent with ONDO's objectives.
With a unique offering centred on agility, security, and profitability at the same time, ONDC streamlines value chains, fills in gaps, and supports innovation, clearing the way for the next generation to pursue uncharted territory.
Ecommerce already makes up 4.3% of the retail sector, and ONDC is projected to expand it, particularly in the industrial, agricultural, and financial services sectors.
Brands can interact with shops thanks to ONDC, and distributors can use it to locate new markets. "Plug and play" services like real-time ordering, quick delivery, and credit management are provided by ecosystem members and may be used by both brands and retailers. Additionally, the network will facilitate more efficient connections with clients and suppliers.
Regarding financial institutions, ONDC offers a special chance to interact with both the buyer and seller of a transaction as well as to extend to untapped geographic and demographic areas.
Offerings to customers are anticipated to drastically change as a result of digitising small- and medium-sized firm data and utilising services like transaction data, fintech, and account aggregators.
The network has the potential to increase operational efficiencies in the manufacturing sector by 5–10% by serving as a one-stop shop for supply chain entities and facilitating access to unmet demand for small- and medium-sized manufacturers.
In the food delivery sector, ONDC has also established itself as a formidable rival after recording 50,000 eateries for live orders in August—a significant rise from 500 in February. The largest manufacturer of food and beverages, Pepsico, joined ONDC last Monday.
India's DPI will be key in India’s digital journey, will reach 50 countries in the next 5 years
India has shown that there is a reasonable and realistic chance for every country, large or little, to also embrace a tremendous digital journey through its digital public infrastructures (DPIs) and One Future Alliance.
A new normal that is open source, nimble, consumer-driven, and "non-intermediated" replaces the old normal, which was characterised by giant tech companies controlling the market. India is establishing its DPI as a fundamental service for each person.
Particularly among the nations of the Global South, who have long believed that digitisation and technology were reserved for wealthy nations, India's narrative about DPI has found a lot of encouragement.
According to Nandan Nilekani, chairman of Infosys and founding chairman of the Aadhaar project, a global coalition of multilateral organisations, including the World Bank and the IMF, will export India's digital public infrastructure (DPI) model to 50 countries over the course of the next five years.
Using an open architecture, he continued, this new way of thinking about digital infrastructure at population scale will become more and more common and pervasive around the world over the following several years.
In order to support the growing demand for financial transfers to bolster vulnerable areas and populations and emergency finance after extreme climate events like floods, the DPIs will also play a crucial role in climate adaptation and mitigation.
According to Nilekani, one of the effects of climate adaptation will be the need to provide anticipatory funding for the construction of more resilient homes in the event of rising sea levels.
The DPIs' technology can be used to build an interoperable network for accessing batteries and charging stations as electric vehicle use rises.
Over 10 billion UPI transactions recorded in August 2023
The National Payments Corporation of India's (NPCI) Unified Payments Interface (UPI), a real-time payment system, passed the 10 billion transaction threshold in August.
According to NPCI data, the number of transactions on the platform increased to 10.5 billion in August from 9.9 billion in July 2023. UPI reported Rs 15.7 lakh crore in funds paid in August, which is an increase from the Rs 15.3 lakh crore figure for July.
There are now 473 banks actively using UPI.
NPCI reported 6.5 billion transactions in August of last year and 3.5 billion in August of 2021, which helps put the platform's growth in context. The payment method has increased nearly three times in just two years.
Peer-to-peer and merchant transactions have both increased on the network, showing widespread consumer acceptance.
The aim set by NPCI is 30 billion transactions every month, or one billion transactions each day.
Fintech-led businesses to rise to $400 billion by 2030
According to a forecast by early stage venture investor Elevation Capital, the Indian fintech sector will generate almost $400 billion in revenue over the next seven years, expanding four times from current levels.
By FY2030, the industry will draw from a revenue pool of about $70 billion, out of a total of $620 billion total financial services revenue pool.
India currently boasts the third-largest fintech ecosystem in the world, behind the US and the UK, with over 9,000 fintech businesses.
Retail loans and digital payments have gotten between $70 billion and $80 billion apiece. According to the research, the SME financing industry has brought in about $55 billion, while wealth management has brought in between $40 billion and $45 billion.
According to the research, equity injection increased from about $2 billion in 2018 to $6 billion in 2022.
With over 200 million Indians using smartphones for digital transactions, 300 million eKYC transactions occurring each month, and more than 2 million account aggregator consent requests being completed each month, the country's digital infrastructure is playing a critical role in the expansion of Internet businesses.
SME lending, followed by retail lending and fintech Saas, is the biggest innovation opportunity in the country.
Fintechs have received about 14% of all investments in this sector, highlighting its importance to the startup community as a whole.
Fintechs will always play an important part in the Indian financial services ecosystem, even as it becomes more digital overall. Fintechs source and support 70% of digital transactions that are registered in the nation. In the past three years, their share has increased by roughly 2.3 times. Fintechs own almost 50% of active accounts in the stock broking sector.
ANTITRUST
Google reaches tentative settlement with 50 states, Puerto Rico, and DC over alleged Playstore monopoly
A lawsuit brought in 2021 over the tech giant's alleged monopolistic control of app distribution for the software that powers the majority of the world's cellphones has been settled in principle with Google by all 50 states, Puerto Rico and the District of Columbia.
The completion of an agreement, court approval, and approval by the attorneys general and board of directors of Google's parent company are all requirements for the arrangement, which was referenced in a court filing last Tuesday.
The parties are prohibited from divulging its specifics for the time being by the temporary pact's terms.
The fight is for a fair marketplace that encourages competition, innovation, and lower prices for consumers, and they look forward to finalising the agreement and sharing more details in the next 30 days.
The Department of Justice and other federal agencies continue to bring significant antitrust actions against Google that are centred on alleged monopolistic practises in the search and advertising markets. Justice's lawsuit involving search will go to trial on September 12.
Google reached a $391 million settlement with 40 states in November last year regarding the tracking of user locations.
One recent attempt to limit the huge influence accumulated by Google, Apple, Facebook, and Amazon was a lawsuit brought by the state of Utah stating that such companies have established unparalleled digital empires by enticing customers into services with no competition.
The main emphasis of the case involving the states was the influence Google has over its Playstore, which allows it to rake in commissions of up to 30% on transactions made through apps installed on Android-powered handsets. Over 80% of the global smartphone market is made up of those gadgets.
In their complaint, the states disputed Google's assertion that the Android operating system is an open one that gives users additional options. It claimed that in order to maintain its distribution of more than 90% of the apps for Android smartphones, Google had put in place anticompetitive barriers. The attorneys general claimed that this market dominance constituted an illegal monopoly.
A significant case brought by the U.S. Justice Department in 2020 centred on alleged abuses of Google's dominant search engine and its digital ad network, which generates about $100 billion in annual revenue for its corporate parent, Alphabet Inc., is one of the lawsuits the Mountain View, California, company is still fighting.
EU designates six big tech gatekeepers including Google, Meta, and Apple under DMA, introduces provisions for fines and sanctions
Last Wednesday, the European Commission identified six gatekeepers for the first time under the Digital Markets Act (DMA), including Alphabet (Google's parent company), Apple, ByteDance, Meta, and Microsoft, with provisions for severe penalties for non-compliance.
According to a statement from the commission, the six gatekeepers will now have six months to guarantee complete observance of the DMA duties for each of their designated core platform services.
The Commission may sanction a gatekeeper up to 10% of its annual global sales, with a maximum fine of 20% in the event that the gatekeeper repeatedly violates the DMA's requirements.
This entails limiting the six gatekeepers' economic influence, providing customers with more options, and opening up new business prospects for smaller, innovative digital firms, for example through interoperability, sideloading, real-time data portability, and fairness.
In addition, the Commission has opened four market investigations to further examine Microsoft's and Apple's submissions, which contend that some of their core platform services, such as Bing, Edge, and Microsoft Advertising for Microsoft, and iMessage for Apple, do not qualify as gateways despite meeting the thresholds.
These investigations are being conducted in accordance with the DMA to determine if the companies' rebuttals are adequately supported to show that the services in question should not be designated. The investigation must be finished in no more than five months.
In another instance, despite Apple's iPadOS not fulfilling the standards, the Commission started a market investigation to investigate the matter further. This investigation must be finished in a maximum of 12 months in accordance with the DMA.
In cases of repeated violations, the Commission is also empowered to enact additional sanctions, such as requiring a gatekeeper to sell all or a portion of their firm or prohibiting them from acquiring any further services connected to the systematic non-compliance.
Google and Facebook concerned over online news law
Canada said it was dealing with the issues of Alphabet's Google and Meta Platforms that they would be subject to an unlimited liability when it presented draft regulations for a bill intended to require them to pay news organisations.
The Online News Act of Canada, which is a component of a global movement to make Internet behemoths pay for news, was passed into law in June and is scheduled to take effect in December.
According to the proposed legislation, Facebook and Google will have to voluntarily negotiate agreements with Canadian news publishers and pay a part of their worldwide income based on a predetermined formula.
On its platforms in Canada, Meta has already stopped allowing news sharing. Before the regulation takes effect, Google Canada also intends to remove news from search results.
A Canadian government official told reporters in a briefing that the preliminary ideas, which will undergo public input, would raise C$172 million ($126.6 million) yearly from Google and roughly C$60 million yearly from Facebook.
Companies can be required to engage in mandatory negotiations under the CRTC's supervision if they fall short of a payment threshold through voluntary agreements.
A framework for discussions between news organisations and internet behemoths will be established this autumn, according to the responsible Canadian regulator, with the intention of starting mandatory bargaining by the beginning of 2025.
The proposed guidelines permit both monetary and non-monetary contributions to news organisations as well as taking into account current business arrangements.
According to the proposed legislation, agreements that Google and Facebook reach must also cover independent local, Indigenous, and official language minority community news businesses.
Microsoft to unbundle Teams from Office to address EU antitrust concerns
Microsoft announced on Thursday that it would detach its chat and video app Teams from its Office product and make it simpler for competing businesses to integrate with its software in an effort to avoid a potential EU antitrust fine.
The adjustments were proposed a month after the European Commission opened an investigation into Microsoft's integration of Office and Teams in response to a complaint made by the Slack workspace messaging software, which is owned by Salesforce.
Microsoft's initial concessions fell short of resolving issues.
As per the developments, the changes seek to address the two major concerns that, the customer should be able to choose a business suite without Teams at a lower price than those with Teams included, and the bigtech should do more to facilitate interoperability between competing communication and collaboration solutions and Microsoft 365 and Office 365 suites.
The modifications will be applicable across Europe and Switzerland starting on October 1.
Teams will be sold to Microsoft's core enterprise customers, who account for the majority of the company's commercial operations in Europe, for 2 euros less per month or 24 euros ($26.17) less per year.
Similar to what it does with Teams, Microsoft will also create a new strategy for hosting the Office web applications within rival services and applications.