Courier firms see ray of hope in postal bill

The controversial postal bill that will be introduced by the ministry of communications in the winter session of Parliament may not include an earlier proposal to restrict foreign direct investment (FDI) to 49 per cent in courier services.

At present, 100 per cent FDI is allowed in courier services.

“Internal work has been reinitiated on the draft Indian Post Office Amendment Bill of 2006. The department of post plans to place the bill for approval in the winter session of Parliament,” said officials.

However, the department still has to take a final call on limiting the FDI cap to 49 per cent, officials added.

Department officials feel it is not desirable to disturb a sector which has been attracting FDI in a big way. Foreign players such as Federal Express, TNT and DHL Express have a substantial interest in India. Temasek recently picked up a stake in First Flight, while DHL took over Blue Dart.

Other provisions in the proposed postal bill include prohibiting private courier companies from carrying any letter or parcel below 150 grams and creating a universal service obligation (USO) fund by making companies pay up 10 per cent of their turnover to cross-subsidise services to rural areas.

The bill will allow private courier companies to deliver letters below the stipulated slab of 150 grams but will stipulate that they should do so at five times the rate charged by India Post or 2.5 times that of the speed post.

Private courier companies have opposed these amendments to the bill, terming them “unfair”.

The Express Industry Council of India (EICI), the apex association representing both domestic and international courier companies in the country, has also opposed the bill. It stated that the proposed amendments, if approved, could maim the Rs 3,500-crore domestic industry, especially small players, and limit the choice for consumers.

“The ministry is most likely to go ahead with key issues despite protests from private players and the EICI. These include a creation of the Mail Regulatory Development Authority for the postal sector and the 150 grams weight slab reservation for India Post. The ministry also wants large courier companies to pay 10 per cent of their total revenues as a USO fee as in the telecom sector,” said officials.