NEW DELHI: This is one mail courier companies would be praying is returned to the
sender. A Cabinet note circulated by the department of posts has mooted 49% cap on
FDI in courier business.
If the proposal goes through, multinationals like Fedex, DHL, UPS and TNT who
hold more than 49% in Indian ventures will have to pare stake. The draft of the Indian
Post Office (Amendment) Bill has another whammy in store for the private sector.
It proposes to make letters, parcels and packets weighing up to 150 gm the exclusive
preserve of India Post. Private players will have to charge 2.5 times the tariff specified
by Speed Post to operate in this segment.
The proposal to amend the Indian Post Office (Amendment) Act has been revived
despite opposition from other government departments and the courier industry. A
source said posts secretary I M G Khan has sent a communication on the proposed
changes to department of industrial policy & promotion (Dipp) secretary Ajay
The proposals specify that a person eligible to seek registration for operating in the
mail sector has to be a company in which not less than 51% of the paid-up share
capital is held by the citizens of India.
"Any dilution in FDI would be a retrograde step. Express industry is a leading driver
of logistics industry the world over and India needs large investments in this sector. It
would impact the India plans of major global service providers like Fedex, UPS, TNT
and DHL, and other international companies like Aramex and OCS," said Express
Industry Council of India's (EICI) Vijay Kumar. EICI represents over 80% of the
private courier players.
The draft Bill has been sent to the Cabinet and, once approved, the government can
introduce the Bill in Parliament, source added.
"The proposal to charge 2.5 times the Speed Post rates is not only unfair competitive
advantage being provided to a competitor (India Post), it would also be a unique case
not prevalent anywhere in the world. The global practice is to charge a price multiple
on the lowest weight slab of the basic postal service offering. In India, it should be on
the 20-gm weight of an envelope and not on corresponding weights and on a premium
business segment like Speed Post," Mr Kumar added.
The private courier companies had vehemently opposed the amendments earlier too.
"In an era of free economy, if the country is embracing any legislation of such nature,
it would send a wrong image internationally and it would also wipe out a vibrant part
of our economy," EICI had said in a communication to telecom minister A Raja.
EICI had also said that the proposed amendment, if approved, could maim the Rs
3,500-crore domestic industry, especially the small players, and limit choice for
consumers. Dipp had opposed the earlier draft of the proposed Bill and is likely to do
so again. Officials feel the final decision, however, rests with the Cabinet.
Economic Times. 31.10.2007
1. According to cabinet note of Postal Dept, the letter & Packers upto 150 gram may be made part & parcel of India Post Portfolio.
2. Private players will have to charge 2.5times of speed post tariff.
3. International couriers now operating in India should be brought under the FDI cap for 49%
4. If it is approved in the cabinet, Government can introduce the Bill in Parliament.