Department of Posts may set up separate entity for e-commerce by next year

NEW DELHI: The Department of Posts ( DoP) may set up a separate entity for handling e-commerce services by next year to cash in on the burgeoning demand for delivery and logistics.

According to sources, during a recent meeting chaired by Prime Minister Narendra Modi, DoP said it aims to conduct a financial feasibility study for setting up a separate entity for e-commerce by October this year and start the operations by next year.

Sources said DoP may appoint an on-board consultant for development and operationalisation of business and marketing strategy for commerce market by July this year.

Communications and IT Minister Ravi Shankar Prasad had earlier said India Post with the world's largest postal network is best suited to offer delivery services to e-commerce firms.

India Post has over 1.55 lakh post offices of which around 1.40 lakh are in the rural areas. On an average, a post office serves an area of 21.21 sq. km and a population of 7,175 people.

Sources said DoP would strengthen e-commerce vertical in terms of resources and infrastructure by April and set up parcel processing hubs, dedicated transmission and mechanised delivery system by July this year.

The Department already has a tie-up with domestic e-commerce players such as Flipkart, Snapdeal, Amazon and Shopclues among others and for international e-commerce, the Department has entered into agreements with e-Bay and Japan Post.

Modi had set up the Task Force in 2014 to leverage the postal network in India and to enhance the role of India Post in financial inclusion, among other services like delivery of goods for eCommerce firms.

In December last year, the Task Force had submitted its report to Prasad. It noted that with India Posts overseeing Rs 6 lakh crore in deposits, it is second only to the country's largest bank SBI.

The report suggested that the government should set up a holding company under the DoP for immediate roll out of banking, insurance and e-commerce services.

The holding company should have five different verticals, and three of them -- banking, insurance and e-commerce -- can start working immediately.