Nandan Nilekani is helping PM build an open technology network for small merchants in retail market.
Now 66, Nandan Nilekani has one more ambitious goal. The high-profile mogul is helping Prime Minister Narendra Modi build an open technology network that seeks to level the playing field for small merchants in the country’s fragmented but fast-growing $1 trillion retail market.
Its stated purpose is to create a freely accessible online system where traders and consumers can buy and sell everything from 23-cent detergent bars to $1,800 airline tickets. But its unspoken objective is to eventually curb the powers of Amazon.com Inc. and Walmart Inc.-owned Flipkart, whose online domination has alarmed small merchants and the millions of local mom-and-pop stores, called kirana, that form the nation’s retail backbone.
As the two global giants poured a combined $24 billion into India and captured 80% of the online retail market with aggressive discounts and promotion of preferred sellers, the kirana shops are fearful of an uncertain future. Despite online commerce accounting for just about 6% of the overall retail market, they are anxious they will be eventually snuffed out, meeting a fate similar to many family-owned businesses in the U.S. and elsewhere.
A pilot of the not-for-profit, government-run network is set to be rolled out next month to select users in five cities. Lenders including ICICI Bank Ltd. and state-owned Punjab National Bank and State Bank of India have bought stakes in the entity. A spokesman for Amazon said they’re trying to better understand the model to see if the Seattle-based company has a role to play. Flipkart didn’t respond to a request seeking comment.
India has become a battlefield for some global retail behemoths that are either shut out of China or are struggling to compete with local rivals there. With almost 800 million smartphone users, the sheer size and potential have turned the South Asian country into an ideal testing ground for many companies, including Google, Meta Platforms Inc. and homegrown giants such as billionaire Mukesh Ambani’s Reliance Industries Ltd.
In his previous avatars, Nilekani helped the government develop the Aadhar biometric ID system, roughly a digital equivalent of the U.S. social security program. For most Indians, it is their first proof of existence. Authorities say it helps reduce fraud and ensures welfare payments reach the right people. Nilekani also helped introduce a payments backbone called the United Payment Interface, or UPI. Used by the likes of Google and WhatsApp, it surpassed 5 billion transactions last month.
Hired as an adviser to ONDC last summer, the salt-and-pepper haired, mustachioed tech czar wants to do for e-commerce what UPI did for digital payments.
But his biggest challenge would be to ensure the network achieves its goals. Amazon and Flipkart have dominated the market because their tested technology lures merchants and buyers to their platforms. The government needs to build something comparable — or better — if it wants to outdo the dominant e-commerce platforms.