The Department of Posts (India) stamps out French connect in parcel entity
The Department of Posts ( DoP) has objected to the plans of GeoPost—French state-run postal services utility La Poste’s subsidiary—to acquire a controlling 60 pct stake in Indian express parcel delivery firm Continental Air Express. The proposal, formally rejected by the foreign investment promotion board (FIPB), could set a precedent, given that the India Post Office Act is in the process of being amended and one proposal calls for a FDI cap in Indian courier companies.
As per global regulations, an operator seeking to establish an Extraterritorial Office Of Exchange (ETOE), i.e. a postal services operation overseas, needs to get an ‘agreement’ from the respective member of the Universal Postal Union (UPU). This means that GeoPost would need an okay from Indian authorities as India is a UPU member.
Currently, FDI up to 100pct is allowed in courier services for carrying packages, parcels and other items that do not come under the ambit of the India Post Office Act. While the FDI policy does not draw a distinction between investment made by a foreign private firm and a foreign government-owned entity, DoP’s prime objection in this case is with respect to La Poste’s move to circumvent UPU regulations.
GeoPost had argued that it is a separate La Poste business that focuses on premium parcels and hence, UPU obligations do not apply. Moreover, its operations in other countries have not triggered such disputes with local operators. GeoPost had also cited DHL’s example, wherein the majority stake is held by Germany’s Deutsche Post, which is also a UPU member, but is operating in India.
The Department of Posts ( DoP) has objected to the plans of GeoPost—French state-run postal services utility La Poste’s subsidiary—to acquire a controlling 60 pct stake in Indian express parcel delivery firm Continental Air Express. The proposal, formally rejected by the foreign investment promotion board (FIPB), could set a precedent, given that the India Post Office Act is in the process of being amended and one proposal calls for a FDI cap in Indian courier companies.
La Poste had reported a EUR 20.1-billion turnover in 2006, of which 15.2 pct came from the international market. The DoP’s objections are on two counts. First, the proposal is akin to La Poste making a “backdoor entry into India”.
As per global regulations, an operator seeking to establish an Extraterritorial Office Of Exchange (ETOE), i.e. a postal services operation overseas, needs to get an ‘agreement’ from the respective member of the Universal Postal Union (UPU). This means that GeoPost would need an okay from Indian authorities as India is a UPU member.
Currently, FDI up to 100pct is allowed in courier services for carrying packages, parcels and other items that do not come under the ambit of the India Post Office Act. While the FDI policy does not draw a distinction between investment made by a foreign private firm and a foreign government-owned entity, DoP’s prime objection in this case is with respect to La Poste’s move to circumvent UPU regulations.
GeoPost had argued that it is a separate La Poste business that focuses on premium parcels and hence, UPU obligations do not apply. Moreover, its operations in other countries have not triggered such disputes with local operators. GeoPost had also cited DHL’s example, wherein the majority stake is held by Germany’s Deutsche Post, which is also a UPU member, but is operating in India.
However, DoP has countered this argument, saying DHL had an operation in India much before it was acquired by Deutsche Post. DoP has also said GeoPost is a subsidiary of La Poste and should be seen as part of the UPU obligations.
