Indian government proposals may rip the courier bag

The government wants to reserve the right to carry letters, book post and parcels weighing up to 150 gm for its postal department. Private courier operators may be allowed to service this sector, but they will have to charge five times the postal department’s tariff for the same articles.

In a cabinet note on the proposed Indian Post Office (Amendment) Bill, 2007, the department of posts in the ministry of communications & IT has also said that in the case of urgent or exclusive mail services, courier companies will have to charge 2.5 times the Speedpost or Express Mail Services rates.

The ministry expects to introduce the Bill in the Budget session of Parliament, scheduled to reconvene on April 26. Industry sources said the move would make private courier services uncompetitive, as their services would be significantly more expensive than that of the postal department. For example, if the postal department charges Rs 100 for a packet weighing less than 150 gm, private courier operators will have to charge a minimum of Rs 500 for the same package.

A bulk of the mail carried in India and originating within the country weighs less than 150 gm. The draft bill, however, makes a concession from the government’s earlier plan, which sought to reserve all postal articles up to 300 gm for the postal department. Costly Parcel

Courier charges to go up 10% of courier company revenue will be earmarked for USO fund Competition Commission calls Bill anti-competitive Watchdog to be set up; TDSAT to settle disputes Courier industry size: Rs 7,000 crore Annual growth: 25% Competition Commission of India (CCI) member and acting chairman Vinod K Dhall said, “There is a major competition issue here. This sector does not require economic regulation.” He said the CCI had given its views and taken up the issue with the government, but was yet to receive a response.

The Rs 7,000-crore courier industry, growing at 25% a year, has called the proposed move by the government retrograde. “We think many courier companies will go out of business,” said Vijay Kumar, chief executive, Express Industry Council of India (EICI), an association of Indian courier operators. However, the government is of the view that the move will help generate additional revenue for the central government.

The bill also proposes to make the registering of courier companies mandatory. There are also provisions to allocate a part of the revenue of courier companies to a universal service obligation (USO) fund.

The draft Bill also seeks to set up a three-member Mail Regulatory & Development Authority to regulate the sector. In case of disputes, it wants to empower the Telecom Dispute Settlement Appellate Tribunal to take the final call. The government also wants to have powers to inspect postal articles handled by private courier operators to ensure they follow the weight classification.