New Delhi: The US government has joined the growing chorus of protest against attempts to amend the Indian Post Office Act, 1898, that would cap foreign direct investment in postal service ventures, implement discriminatory pricing against private courier services on packages up to 150g and introduce mandatory licensing for private companies offering postal services.
In a letter to communications minister Dayanidhi Maran, Geoffrey Pyatt, charge d’affaires at the US Embassy in New Delhi, said such changes would have a negative impact on the express mail and courier industry as well as Indian businesses and consumers that use these services. Dayanidhi Maran was not available for comment.
Pyatt’s letter, sent on 4 May, opposes the proposal to cap foreign ownership to 49% in postal services. Currently, some foreign companies have wholly owned subsidiaries in the business in India. He said this amounted to reversing reform and would send “a very negative signal to foreign investors at a moment when India is just beginning to attract significant FDI inflows.”
The US Embassy declined comment on the letter.
While the government’s stated aim is to get private courier players to play a greater role to spread postal services and to introduce regulatory control over the mushrooming business, the changes are being seen as drastic.
A provision in the amendment that seeks to set tariffs for private companies at up to five times the government postage rates for regular letters and 2.5 times the government rates on “express” deliveries, Pyatt’s letter said, would go well past protecting universal service obligation. “Instead, it would expand India Post’s monopoly power without improving service,” the letter said.
Companies said they would prefer a multiplier in the 1.5 to 2 range. “We have asked the government to discuss the proposed multiplier with us. At present, they seem arbitrary and extreme,” said R.K. Saboo, chairman, Express Industry Council of India, a courier industry lobby. On licensing, the letter said that since express mail companies are already subject to regulations by the customs department, a new regulation is not required. The amendment proposes a mail regulatory and development authority and a yearly licence and registration fee.
Pyatt’s letter also said there would be a negative fallout on certain industries: “Indian businesses, especially in key sectors such as IT, utilize express mail services to streamline their supply chain and improve client service.”