New Delhi: The government has proposed to reserve the lucrative letters segment of up to 150 grams for the postal department and allow private players to carry these letters only if they charge up to five times more than the government tariff.
“The government shall have exclusive privilege of conveying by Post from one place to other all articles weighing up to 150 grams,” according to the Cabinet note on the proposed Indian Post Office (Amendment) Bill, 2007.
The note proposes that private players would have to charge five times the government tariff for unregistered mail and 2.5 times in the case of express mail.
This means for unregistered non-express mails, if the postal department charges Rs5 up to 20 grams, private couriers would have to charge a minimum Rs25 to operate in this reserve areas. For a 150 gram letter while DoP charges Rs40, private couriers will charge Rs200.
For Speed Post articles, the proposed minimum tariffs for private courier companies are 2.5 times the tariffs of the Department of Post. So if DoP charges Rs20 for a weight up to 50 grams, private players like Blue Dart will have to charge Rs50 for the same for a local delivery.
However, DoP has lowered the reservation limit of all postal articles up to 150 gram for the postal department from the earlier 300 gram with these higher costs.
“Central government may allow by notification to carry letters up to 150 grams subject not to charging any discount less than five times of postal tariff of letter mails for corresponding weight for unregistered mail and for urgent or express mail 2.5 times of Speed Post or EMS rate,” the cabinet note said.
While DoP sources say these proposals have been framed after discussion with stakeholders such as American Chambers of Commerce in India, Express Industry Council of India, DHL Express, Blue Dart Express favoured “weight and rate” criteria, the industry said support to this criteria was given on a different context as envisaged in the earlier proposal.
Express Industry Council chairman R K Saboo said the proposals, if implemented, would make private couriers more uncompetitive and expensive. This would particularly hurt since about 80% of the mail weighs less than 150 gm.
“We had asked the government to introduce minimum 2-3 times price multiples in minimum weight slab of DoP tariffs and that should compensate the USO requirements. Five times payment is impractical and not a level playing field creation,” he said.
The Bill proposes setting aside 10% of courier company’s revenue for Universal Services Obligations fund.
In the earlier Bill, the exclusive privilege was liberalised on the basis of only weight criteria of 300 grams. Now, the above “weight & rate” criteria is based upon the suggestions received from these stakeholders.
This type of criteria is prevalent in Germany, Denmark, Australia and Canada, the note said.