Angry Courier firms to go to court

New Delhi, Apr 23: Angry over the government's proposal to amend the century old Indian Postal Act of 1898 that would translate into the state-owned postal department monoplising the light courier business mainly of carrying letters, the private courier operators are gearing up to go to the court after a meeting tomorrow.

The Express Industry Council of India the apex courier body (EICI) estimates that upto 60 per cent of industry revenues is accounted for by documents weighing 300gm or less.

The worst hit will be small courier companies who solely rely on small packages. The industry, EICI says, is already under the umbrella of service tax.

The Department of Posts on Thursday last had proposed the amendment of the Indian Postal Act 1898 to enable letters weighing up to 300 g to be the ''absolute and exclusive'' privilege of state-owned India Post.

The government also proposes on the lines of the telecom sector to impose Universal Service Obligation (USO) fees on them.

The Indian and foreign courier companies under the EICI have scheduled a meeting to chalk out their strategy which includes seeking legal opinion on the constitutional validity of the amendment.

Under the USO, the courier companies (with annual turnover of Rs 25 lakh or more) will have to shell out 10 per cent of their turnover with the government.

The draft bill, which aims to amend the Indian Post Office Act, 1898, has been put-up by Department of Post (DoP)on its website for comments from general public which are opposed to both these provisions.

Courier companies fear that the first provision will wipe out the revenue base of the Rs 4300 crore industry while the second will make the operations unviable.

In this financial year the industry is estimated to have contributed Rs 600 crore as tax revenue to the central exchequer.

The EICI says that the provisions go against the spirit of free competition and providing a choice to the consumers.

A Blue Dart official said that they are not in competition with Post Offices since the India Post provides plain mail and parcel service, the private sector are into express mail and logistics.

Industry associations and private players have opposed these changes and said that it would sound the death knell to the Rs 3,500 crore courier industry, especially the smaller players. This will wipe out a segment of the service sector economy which offers one million jobs.

The Department of Posts (DoP) has redefined ''letter'' that would include any communication by written, mechanical, electronic and other means (letter-card, post-card and all envelopes), documents and return answers. However, newspapers and parcels have been exempted.

The Bill also states that a regulator was essential as this would for the first time provide a mechanism for customers to lodge grievances. The regulator will also fix quality, service and delivery parameters and carry out performance evaluation measures. The DoP has also pointed out that the absence of a regulator has resulted in the courier industry not having a wage structure and labour laws.

''The monopoly over a specific part of the letter mail of all descriptions up to a specific weight limit is essential as Department of Post is required to fulfil the Universal Service Obligation, which involves postal coverage to financially non viable areas at affordable rates for the common man,'' the Department of Posts said after it had posted the draft Indian Post Office Amendment Bill, 2006 on its website.

Justifying the move the Department of Posts said the private courier companies often operate only in "creamy" areas and big business centres.

The ''requirement of keeping a small segment of postal business was the exclusive privilege aimed at providing service to the deprived.'' The draft Bill also proposed levying a fee up to 10 per cent of revenue of courier companies with a turnover of Rs 25 lakh and more towards USO Fund and registration and renewal fee of Rs 25,000 and Rs 10,000 respectively for small and medium couriers.

The fee would, go up to Rs 10 lakh for registration and five lakh for renewal for large couriers operating nationally and internationally while exempting the small and medium companies from contribution to Universal Service Obligation (USO) Fund.

The independent Regulator as in Telecom, Power and Insurance sector will fix a quality parameters like service criteria, deliverance parameters and time to time performance evaluation for the benefit of the customers.

By regulating the framework of the courier industry, the accountability to the consumer and common man in far-flung area will be ensured, according to the draft bill.

Independent Regulator will strengthen the enforcement of rights of consumers and growth of new products and services at competitive rates will benefit customers.

UNI