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Rediff.com  » Business » Panicky courier cos want govt to rethink move

Panicky courier cos want govt to rethink move

March 13, 2006 19:28 IST

The Competition Commission of India has called for wider consultation on amendment to Post Office Bill that among other things seeks to give exclusive rights to India Post for carrying letters weighing below 500 gms.

Expressing surprise that CCI had not been consulted on this move, the commission member Vinod Dhall said: "I don't know what stage the Bill has reached. We will make a request to the ministry concerned to have it (consultations) so that we can also study it from the point of view of competition and then offer our views."

Leading private courier companies also asked the government to hold wide-ranging consultation process on the proposed amendment to the Indian Post Office Act, 1898 saying implementing the bill in the current state would be a retrograde step for the country in terms of competition and level playing field.

As of now, the proposed Bill has three main provisions which the industry association Express Industry Council of India members are opposing -- conferring the exclusive right of dispatching letter below 500 gms by the Department of Post only, setting up of a 'independent' regulator and payment of a Universal Service Obligation levy that will be 10 per cent of the turnover.

When contacted, Department of Post officials declined to comment saying the Bill is at a very premature stage for its contents to be discussed.

The EICI which has the bigger logistic companies as members including UPS, DHL and Blue Dart, AFL among others said, "This draft should be withdrawn and formal process be implemented for consultation with the industry association."

They said out of the Rs 4,000 crore (Rs 40 billion) turnover, about 50 per cent of the revenue come from letters weighing below 500 gms and for small operators, the contribution is over 80 per cent.

Speaking at a Round Table meeting on the Indian Post Office amendment bill, organised by CII, EICI chairman R K Saboo said courier and express industry is giving Rs 600 crore (Rs 6 billion) tax every year and growing at a 25 per cent rate. They are enabling domestic and international trade besides creating 10 lakh (1 million) full-time jobs.

"Courier and express companies do not compete with DoP for letters and EICI supports modernisation of DoP but the real opportunity is in deregulation of postal services," he said, adding the Bill's provisions are aimed to covering the deficit of Rs 1,400 crore (Rs 14 billion) of postal department through the USO that is proposed to be imposed on the operators.

The industry, he said has put in Rs 2,500 crore (Rs 25 billion) investment in brands and infrastructure, moved 30,000 tonnes of cargo, and over Rs 100 crore (Rs 1 billion) of shipments.

Cyrus Guzder, chairman of CII's transportation committee said "If enacted, the Bill would drive the Indian economy backwards and effectively wipe out the express and courier industry."

Saboo also said the proposed Bill may risk putting India's WTO commitments in terms of transparency of regulations, mutual recognition of qualification of service providers and liberalisation commitments.

Rejecting the proposal of a 10 per cent levy, he said there are several commercial models that can resolve the DoP's cost problem, "if one exists."

The private courier companies charge Rs 20 for letters weighing up to 200 gms and can cost up to Rs 50 for above 2000 ms while between 201-500 gms, it can cost up to Rs 60.

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