The APIs India runs on: India Stack
ONDC: Disrupting the Disruptor?
Imagine if a platform sold everything you want at half the price of other sellers. Why would you then buy from elsewhere, ever?
This question was on the mind of many people last week when they found out that burgers on ONDC cost half the price they did on Swiggy and Zomato. Consequently, ONDC took the internet by storm.
The government is, figuratively, a very well-funded startup. And though it can afford to give larger “discount coupons” in the form of subsidies to a larger number of people than the private players in the food delivery segment can, even the government can not sustain negative unit economics for long.
The stimulus of up to ₹75 off per buyer on every eligible order was implemented when the network received less than 100 orders a day. And now that ONDC has started averaging 10,000 orders per day, the incentives to subsidise delivery cost for buyers are going to be capped. So the price gap between ONDC and other food delivery apps will shrink, and other factors will become significant for customers to take into account while placing t heir orders. Looks like Swiggy and Zomato are safe — for now.
While the government may have caught up by providing this common platform to facilitate commerce online, startups will run further. All ONDC does is provide a base to everyone. Innovating and shipping on such bases are what successful startups do best. Disrupt or get disrupted.
ONDC is not alone. Introducing: India Stack.
…something that needs no introduction, because you can see it all around you today.
When you need to identify yourself, you show your Aadhaar.
When you need to access such documents, you pull out DigiLocker.
When you need to register on a platform using these, you use e-KYC.
When you want to buy or sell, you can do so through ONDC.
When you need to make the transaction, you use UPI.
All of these are digital public infrastructure. Earlier, when we mentioned “public infrastructure”, only physical public infrastructure like highways and buildings came to mind. But that will soon change. Because through India Stack, now India exists as much in the wires and in the waves as it does in the highways and buildings and trains. This aim of not only digitising India, but doing so with inclusion as a focus, is facilitated by India Stack.
India Stack is a set of open APIs that anyone can utilise — be it developers, startups, or governments. It is the name given to a set of tech products and frameworks that join synergise to solve India’s problems.
India Stack consists of 4 major layers:
Presence-less Layer: allows for services to be provided without the need for the customer to be physically present. Key tech: Aadhaar
Paperless Layer: allows for services to be provided without the need for physical documents. Key tech: e-KYC, e-Sign, DigiLocker
Cashless Layer: allows for services to be provided without the need for cash. Key tech: IMPS, UPI
Consent Layer: allows customers to control how their data is used and accessed.
What’s the big deal, you ask?
What makes India Stack unique globally is that it is the only public digital infrastructure catering to 1.3 billion people, offering open APIs for anyone to build applications on top. Without it, we would never have achieved massive adoption of non-cash based transactions, access to government programs would have kept getting increasingly disorganised, and signing up for facilities would have remained a long-winded process. As highlighted in the Indus Valley Annual Report 2023, “India Stack’s interoperable identity, data and payment layers are reducing business transaction friction.”
India is now home to the largest population in the whole world. To avoid massive pileups in all operations, smoothness is of paramount importance. That is what India Stack makes possible. Without India Stack, we would be stuck in the digital version of a road jam. All the time. GDP growth of ~6% YoY? 0% chance of falling into a recession in 2023? Forget all of that. It is highly likely that all hell would break loose if we did not have India Stack reducing friction in all aspects of business today.
But who builds and owns these digital highways, rails, markets?
In his book, "Imagining India", Infosys co-founder Nandan Nilekani first mentioned his vision of a digital ID system. Back in 2008, Nilekani “had a vague idea of using digital ID as a foundation. Opening it up with APIs to build applications. Creating a KYC to accelerate financial inclusion, mobile inclusion." The government had already set up a committee to develop such a unique ID system in 2006. Nilekani and his team transformed it into a digital, cloud-based platform using APIs. Aadhaar, the resulting digital ID, thus became the foundation for the rest of the projects that followed for India's public digital infrastructure.
Today, the components of India Stack are owned and maintained by different agencies. UIDAI owns Aadhaar products such as e-auth and e-KYC. eSign is a technology specification maintained by the Ministry of Communications and Information Technology. DigiLocker is owned by the Ministry of Electronics and Information Technology. UPI is owned by the National Payments Corporation of India. The Account Aggregator framework is regulated by RBI and its technology standards and owned by ReBIT.
If you want to start building on any particular component of India Stack, the relevant government agency or institution owning that particular product will be able to provide access to APIs, sandboxes, and other pieces needed to start building. Alternatively, you can also use APIs and sandboxes offered on top of India Stack products by intermediaries like Digio, Karza, and Signzy.
“India Stack is India’s gift to the world”
Our ethos of Vasudhaiva Kutumbakam lives on in India Stack. We have always strived to grow together, not to race ahead alone. Having successfully implemented these components in India, we are now assisting others in developing platforms that ensure the social and financial inclusion of their citizens.
The Modular Open Source Identity Platform (MOSIP), is developing digital ID projects in foreign countries along the lines of Aadhaar. Six nations — Sri Lanka, Morocco, the Philippines, Guinea, Ethiopia, and the Togolese Republic — are already using the platform and running large pilot projects. Additionally, five more countries have expressed their willingness to implement the platform and initiate rollout.
Technology undoubtedly has the potential to accelerate the elevation of the low-income class by enabling financial inclusion. Today, developing and developed economies alike are plagued by wealth inequalities and marginalisation of communities. Couple this with an ever-increasing population and you have a level of operating complexity that increases exponentially.
Tackling such a situation is exactly what India Stack shines at. Each massively-scalable component complements the other to produce a whole greater than the sum of its parts.
In any emerging market, the existence of certain institutional voids hinders a buyer and seller attempting to come together and conduct business. These voids typically have one of two root causes:
One, not being able to find relevant information for the buyer and seller to find each other and transact.
Two, issues related to trust and contracts. Absence of ways to enforce implicit/explicit promises that they enter into upon deciding to transact.
India Stack tackles both of these. Root cause 1 is solved by ONDC and UPI. Root cause 2 is solved by Aadhaar and DigiLocker layer. Having tackled both kinds of problems faced in emerging markets, India Stack unlocks the ability to accelerate development as no other infrastructure can.