India Post to lose its monopoly; govt. forces courier cos to charge double rates
NEW DELHI: A planned overhaul of a 113-year-old postal law proposes to end government monopoly completely in the next decade and a half, but, ironically, sets the clock back for courier companies, which are governed by a different policy at present. The draft Post Office Bill 2011 aims to open the letter mail segment to the private sector in 15 years by withdrawing all exclusive rights to India Post and removing all pricing curbs on private courier companies. The Department of Posts has sent the draft bill for cabinet approval to replace the archaic Indian Post Office Act 1898. The amendment will also provide greater legitimacy to the courier industry.
"Considering the role of couriers in the present economy, opening up the letter mail sector to them will not only accord legitimacy to the private operators but also would be recognition of market reality ," said an official in the department privy to the cabinet note. Courier companies are not celebrating , though. They say the transition regime proposed is too harsh and could end up killing the over Rs 7,000-crore domestic industry that engages nearly one million workers and pays Rs 1,200 crore in service tax.
In the run-up to the complete deregulation , the draft bill has proposed to open the express mail segment (EMS) with a "reserve area" of 50 gm for all articles at a price multiple of twice the government EMS rate. That is, a courier firm will have to charge at least Rs 50 for a package weighing up to 50 g, which is twice the Rs 25 charged by India Post for its Speed Post service for a similar package. At present, couriers are allowed in the EMS segment without any restriction or price, making the market fiercely competitive. The reserve area regulation will give India Post time to prepare for a more competitive regime.
