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Amendment in IPO Act and FDI Cap for courier cos opposed

Amendment in IPO Act and FDI Cap for courier cos opposed
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First Published: Tue, May 01 2007. 01 13 PM IST
Updated: Tue, May 01 2007. 01 13 PM IST
New Delhi: Assocham has opposed the government move to restrict foreign shareholdings to 49% in courier companies and amendment in the Indian Post Offices Act 1898 making their annual registration renewal mandatory which will ultimately lead to Inspector Raj.
In a note submitted to the Department of Posts, the chamber has resisted the department’s proposal to charge two and half times more to carry postal bags, weighing upto 150gms for courier companies as compared to speed post tariffs.
This move coupled with the reduced FDI limit to 49% will have serious implications on the private courier industry.
The principles of competition advocate a level playing field for state-owned and privately run companies in the same business. In a market driven economy, bulk of economic activity would arise from private entrepreneurship.
There should be competitive neutrality treatment for all alike; any discrimination or preferential treatment on the basis of ownership or otherwise goes against the spirit of fair competition. Every policy should be competitively neutral amongst all players, whether these be private enterprises or government departments.
The move is clearly against competition and will promote inefficiency in the courier industry. If consumers have urgent or time-sensitive documents to send, they would be forced to use the Indian Post Office, which has a reputation for inefficiency and delayed deliveries.
In case, the move was not discouraged, it will also bring down employment in the private courier sector as major chunk of business comes from less than 150gm segment. Besides courier industry supports trade and commerce, directly helping in economic growth of the country.
The industry perception is that there was no need to bring down FDI in courier industry and intense competition amongst various courier service providers has resulted in improvement in availability of service at affordable price to consumers. With this proposed move the consumer will be deprived of services and low cost. Consumers, who need to send an urgent mail, should not be deprived of the option to avail a private player’s faster service at the existing rate.
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First Published: Tue, May 01 2007. 01 13 PM IST
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