North Block in no mood to give extra space to Post
The draft bill on capping of FDI to 49% had earlier also met with opposition from not just the industry but also various ministries.
By Deepshikha Sikarwar, TNN |
NEW DELHI: North Block has turned down the postal department’s proposal to amend the Indian Post Office (Amendment) Act. The finance ministry has expressed reservations on capping of foreign direct investment (FDI) to 49% and providing exclusive rights to Indian Post on letters, parcels and packets weighing up to 150 gram as proposed by the postal department.
Capping for forex to 49% would force multinationals like Fedex to pare down their stake in Indian venture while exclusivity of India Post, it is feared, would affect private courier companies and consumers by wiping out competition.
The proposal, which was nixed once, has again been revived by the department of posts (DoP), which has circulated a draft Cabinet note to various ministries for their feedback. Sources said both department of revenue and economic affairs were opposed to changes suggested by the postal department.
The proposal, if accepted, will seriously impact the business of multinational courier companies because the draft amendment bill also seeks to restrict letters, parcels and packets weighing up to 150 gram for India Post.
Multinational courier companies proposing to operate in the segment will have to charge 2.5 times higher than speed post. Also, they would have to seek annual registration to operate in the sector.
Most of the global leaders in the business, like DHL, Fedex, UPS and TNT, are present in India as the current policy allows 100% FDI in the sector.
Some other ministries, including commerce & industry, were also opposed to the move, sources said. The Investment Commission headed by Tata Group chief Ratan Tata had also expressed strong objections to this proposal last year.
The draft bill had earlier also met with opposition from not just the industry but also various ministries. The department of posts had proposed these changes for the first time in 2002 under the NDA government. The draft was revived again under the tenure of the UPA government in 2006.
Capping for forex to 49% would force multinationals like Fedex to pare down their stake in Indian venture while exclusivity of India Post, it is feared, would affect private courier companies and consumers by wiping out competition.
The proposal, which was nixed once, has again been revived by the department of posts (DoP), which has circulated a draft Cabinet note to various ministries for their feedback. Sources said both department of revenue and economic affairs were opposed to changes suggested by the postal department.
The proposal, if accepted, will seriously impact the business of multinational courier companies because the draft amendment bill also seeks to restrict letters, parcels and packets weighing up to 150 gram for India Post.
Multinational courier companies proposing to operate in the segment will have to charge 2.5 times higher than speed post. Also, they would have to seek annual registration to operate in the sector.
Most of the global leaders in the business, like DHL, Fedex, UPS and TNT, are present in India as the current policy allows 100% FDI in the sector.
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Some other ministries, including commerce & industry, were also opposed to the move, sources said. The Investment Commission headed by Tata Group chief Ratan Tata had also expressed strong objections to this proposal last year.
The draft bill had earlier also met with opposition from not just the industry but also various ministries. The department of posts had proposed these changes for the first time in 2002 under the NDA government. The draft was revived again under the tenure of the UPA government in 2006.
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