FedEx seeks approval for 100% arm in India

As If in a response to DHL Express acquisition of Blue Dart – which gave the German courier & express company a foothold of the domestic express cargo – Federal Express (FedEx) has now approached the government to set up a wholly-owned subsidiary in the country.

This signals FedEx entry into the domestic express cargo segment, which has so far been a reserve for home-grown courier companies.

As of now, FedEx operates in India as cargo airline which limits its role to airlifting of carrying export and import cargo from international airports.

For domestic pick and delivery, it has enter into an arrangement with a clutch of domestic door-to-door express cargo companies.

As a spin off, having a subsidiary in the country will also make it easier for the US express major to expand its footprint in the domestic market by acquiring domestic companies.

Prior to its acquisition of Blue Dart, DHL Express parent consolidated its operations in India.

The FedEx’s proposed subsidiary has plans to offer courier, door-to-door pick up and delivery services within the country and integrated transport & logistic solutions and related and value-added services including ground transportation and warehousing.

This will put FedEx in direct competition with domestic courier & express cargo majors such as Blue Dart, Safexpress, XPS and Gati.

Besides, the Indian subsidiary will also provide back-office support and IT-related services to FedEx Express operations worldwide and in India.

This includes customer support services including online tracking, telephonic tracking, billing and support in relation to international transportation of shipments and other business activities, including management consultancy and information technology-related activities.

In its application to the government, Federal Express Corp, US, has proposed to set up a wholly-owned subsidiary with 100% foreign equity amounting to Rs 2.30 crore.

The company will hold all but one share and Federal Express International Inc will hold one share.

Federal Express Corp is the holding company of the FedEx group while FedEx International operates group international operations outside the US.

Foreign direct investment up to 100% is permitted in courier services with prior government approval excluding distribution of letters, which is reserved exclusively for the state.