Cabinet considers FDI cap in couriers
This is one mail courier companies would be praying is returned to the sender. A Cabinet note circulated by the department of posts has mooted 49% cap on FDI in courier business.
By G Ganapathy Subramaniam & M K Venu, TNN |
NEW DELHI: This is one mail courier companies would be praying is returned to the sender. A Cabinet note circulated by the department of posts has mooted 49% cap on FDI in courier business.
If the proposal goes through, multinationals like Fedex, DHL, UPS and TNT who hold more than 49% in Indian ventures will have to pare stake. The draft of the Indian Post Office (Amendment) Bill has another whammy in store for the private sector.
It proposes to make letters, parcels and packets weighing up to 150 gm the exclusive preserve of India Post. Private players will have to charge 2.5 times the tariff specified by Speed Post to operate in this segment.
The proposal to amend the Indian Post Office (Amendment) Act has been revived despite opposition from other government departments and the courier industry. A source said posts secretary I M G Khan has sent a communication on the proposed changes to department of industrial policy & promotion (Dipp) secretary Ajay Shankar.
The proposals specify that a person eligible to seek registration for operating in the mail sector has to be a company in which not less than 51% of the paid-up share capital is held by the citizens of India.
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“Any dilution in FDI would be a retrograde step. Express industry is a leading driver of logistics industry the world over and India needs large investments in this sector. It would impact the India plans of major global service providers like Fedex, UPS, TNT and DHL, and other international companies like Aramex and OCS,” said Express Industry Council of India’s (EICI) Vijay Kumar. EICI represents over 80% of the private courier players.The draft Bill has been sent to the Cabinet and, once approved, the government can introduce the Bill in Parliament, source added.
“The proposal to charge 2.5 times the Speed Post rates is not only unfair competitive advantage being provided to a competitor (India Post), it would also be a unique case not prevalent anywhere in the world. The global practice is to charge a price multiple on the lowest weight slab of the basic postal service offering. In India, it should be on the 20-gm weight of an envelope and not on corresponding weights and on a premium business segment like Speed Post,” Mr Kumar added.
The private courier companies had vehemently opposed the amendments earlier too. “In an era of free economy, if the country is embracing any legislation of such nature, it would send a wrong image internationally and it would also wipe out a vibrant part of our economy,” EICI had said in a communication to telecom minister A Raja.
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EICI had also said that the proposed amendment, if approved, could maim the Rs 3,500-crore domestic industry, especially the small players, and limit choice for consumers. Dipp had opposed the earlier draft of the proposed Bill and is likely to do so again. Officials feel the final decision, however, rests with the Cabinet.Download
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