India lines up banks for e-commerce effort to take on Amazon, Walmart

By Munsif Vengattil and Nupur Anand

NEW DELHI (Reuters) -India’s effort to interrupt Amazon Inc and Walmart Inc’s dominance of its e-commerce sector, by establishing its personal open community, has begun lining up banks and different key gamers wanted to maneuver it ahead, sources aware of the matter mentioned.

A few of India’s greatest banks are in discussions about establishing “purchaser platforms” to let their clients place orders for items and companies over the Open Community for Digital Commerce (ONDC), which the Indian authorities soft-launched in April, the sources advised Reuters.

The success of the community, which might promise equal entry to all on-line sellers and patrons no matter their dimension, is a precedence for Prime Minister Narendra Modi, who faces strain from small companies to behave in opposition to the outsized affect of Amazon and Walmart’s Flipkart in India’s e-commerce.

Policymakers in different international locations as properly are methods to rein in massive tech firms’ dominance of on-line purchases.

“When you have a look at the vendor aspect, anyone who could make their digital catalog seen utilizing this widespread language can have entry to a big pool of patrons shared throughout apps,” ONDC Chief Government T. Koshy mentioned concerning the community. “It’s not managed by one massive company.”

Koshy mentioned he had held talks with banks, enterprise capitalists and telecoms firms, however declined to call them or to touch upon how far the discussions had progressed.

Indian e-commerce was value greater than $55 billion in gross merchandise worth in 2021 and can develop to $350 billion by the tip of this decade, in response to authorities estimates. Amazon and Flipkart management greater than 60% of that market, which now accounts for about 8% of shopper purchases in a rustic of 1.35 billion folks.

ONDC goals to cowl at the very least 100 cities and cities by August, with a goal of signing up 900 million patrons and 1.2 million sellers in 5 years.

Financial institution of Baroda’s chief digital officer, Akhil Handa, mentioned his financial institution was in talks concerning the mission but it surely was too early to speak about particular use instances.

“This actually has the potential to be the subsequent massive factor,” he mentioned.

State Financial institution of India, Axis Financial institution, Punjab Nationwide Financial institution, ICICI, HDFC, Kotak Mahindra and IDFC First are amongst different lenders in discussions with ONDC to arrange purchaser platforms, three sources aware of the matter advised Reuters. They spoke on situation of anonymity as a result of they weren’t authorised to talk to the media.

Kotak mentioned it had invested in ONDC with the idea that the mission would “redefine digital commerce within the nation”. It didn’t touch upon purchaser platforms.

The opposite banks didn’t reply to requests for remark.

The platforms would permit the banks to drive use of their playing cards, loans, and different companies, the sources mentioned.

The banks and different monetary establishments had already dedicated to a mixed preliminary funding of two.55 billion rupees ($32.8 million) within the ONDC mission.

Whereas the mission is shifting ahead, nonetheless, there have been doubts whether or not it will diminish the presence of Amazon and Flipkart.

“The community is just not about each small participant colluding to make an enormous firm like Amazon irrelevant,” mentioned Pranav Pai, managing accomplice at 3one4 Capital which invests in start-ups.

“Components like loyalty and belief for Amazon’s fulfilment companies will nonetheless play a component in shopper selections on-line.”

Amazon and Flipkart didn’t reply to requests for remark.

Enterprise capital companies Accel and Sequoia are additionally in talks about probably investing in start-ups that will be part of ONDC, one of many sources mentioned. Telecom companies Bharti Airtel and Vodafone Thought are in discussions on how they may utilise the community, two of the sources mentioned.

The companies didn’t instantly reply to requests for remark.

Reuters reported final week that Alphabet Inc’s Google was additionally in talks with ONDC, whereas Paytm, India’s main fintech firm, had already joined.

(Reporting by Munsif Vengattil in New Delhi and Nupur Anand in Mumbai; Enhancing by Krishna N. Das and Edmund Klamann)