India’s bigger banks are in discussions with the Open Network for Digital Commerce (ONDC), which the Indian government soft-launched in April, to set up buyer platforms to let their customers place orders for goods and services. 

By offering a platform to several small and large-scale e-commerce players, the ONDC is being pitched as an open protocol solution to break the dominance of large e-commerce firms like Amazon and Walmart’s Flipkart.

Besides banks, the government will rope in venture capitalists and telecom companies to support the project. ONDC plans to cover at least 100 cities and towns by August. It has a target of signing up 900 million buyers and 1.2 million sellers in five years.

State Bank of India, Bank of Baroda, Axis Bank, Punjab National Bank, ICICI, HDFC, Kotak and IDFC First are some of the lenders which are in discussions with ONDC to set up buyer platforms, Reuters reported. The platforms would allow the banks to drive use of their cards, loans and other services.

The banks and other financial institutions had already committed to a combined initial investment of Rs 2.55 billion in the project.

Venture capital firms Accel and Sequoia are in talks about potentially investing in start-ups that would join ONDC, Reuters reported. Telecom firms Bharti Airtel and Vodafone Idea are in discussions on how they could utilise the platform.

Google was reportedly in talks with ONDC while Paytm, India's leading fintech company, had already joined.

According to the Reuters report, the success of the network is a priority for Prime Minister Narendra Modi, who faces pressure from small businesses for action against the outsized influence of Amazon and Flipkart in India's e-commerce.

Indian e-commerce, which hit over $55 billion in gross merchandise value in 2021, is estimated to grow to $350 billion by the end of this decade. Amazon and Flipkart have over 60% market share, accounting for about 8% of consumer purchases in the country.