Global courier groups may sue over India post changes

Global courier companies including DHL and Federal Express will take legal action against India’s postal authority if it succeeds in winning amendments to the country’s postal laws that they fear could shut down some courier businesses.

The courier companies said they were “shocked and surprised” by what they called “dramatic changes” proposed by India’s department of posts, which wants to create a new postal regulator and charge a levy on courier company revenues to pay for publicly run services to remote areas.

The postal department is also seeking to redefine what constitutes a “letter” in a long-heralded reform to India’s 108-year-old postal service laws. This would in effect impose a state monopoly on the fastest growing segment of the courier industry.

An executive of the Express Industry Council of India (EICI), which represents both private Indian and foreign courier operators, said the body would fight these proposals “all the way”, following a fiery meeting on the subject yesterday in Mumbai.

India’s postal laws currently have no statutory definition of what constitutes a “letter”, other than to describe it as something that constitutes “communication between two parties”, according to a senior industry official.

Under the proposed amendments to the law, documents weighing less than 300 grams would be designated as “letters” and would be deliverable only by the department of posts.

“The letter re-definition catches us,” said Chris Callen, country manager for DHL Worldwide Express. Documents, including letters, are the larger part of DHL’s Indian business, which is growing 25 per cent a year.

Movement of documents and letters account for about half of India’s total postal traffic, in a courier and express mail industry which is valued at about Rs40bn (Dollars 5.3bn) and growing at about 20 per cent a year.

Such growth has prompted a wave of new investment and consolidation in the industry. DHL, part of Deutsche Post, has invested Dollars 250m over the past decade, while rivals TNT, UPS and Federal Express have also expanded aggressively

Mr Callen said the industry’s mood was one of “deep concern” over the plans, though he said the private operators welcomed Delhi’s invitation to discuss the amendements. He said the industry was “covering all bases”, referring to the legal option. The department of posts, however, has argued that it should retain a segment of letter traffic “as its exclusive privilege”.

An executive at the EICI said the 10 per cent levy on private courier companies’ total revenues seemed to be an unfair penalty to ensure the provision of a universal service that covered the countryside.