Barely a year ago – December 1, 2006 to be precise, Franklin L. Lavin, U.S. Under Secretary of Commerce for International Trade had pointed out that companies such as UPS enable global commerce and help grow trade between the U.S. and India.
     "If time is money, then UPS has saved millions of dollars for the 10,000 customers you have here in India," Lavin had said on the first anniversary of the UPS store in Mumbai.
     Since then, a lot has happened in the air cargo sector in the country.
     While aviation infrastructure and air cargo facilities are being enhanced, the amount of carriers has grown but a number of hurdles still remain to be overcome. The Indian government, or rather many of its arms – has yet to let go of what was once known as "license raj" hangover. How else can one explain the stranglehold of the Indian post and telegraph department (now known as India Post) on a section of the express and courier industry?
     Global giant UPS with Jetair Business Solutions, its Indian partner, has seen business grow by more than 25 percent over the last year. It has set up a handful of its retail outlets—The UPS Store—in select locations and in four year’s time hope to have 150 of such stores all around the nation. This, despite the fact that the Indian government-owned postal service has been laboring to curb the growth of international express couriers doing business in the country.
      While most other sectors of the government have taken the liberalization of the economy in their stride, the ministry which handles the postal department has sent a proposal to Parliament. The proposal in the form of a draft Bill (Indian Post Office Amendment Bill 2006) seeks to ban courier and express companies from carrying and delivering packets weighing up to 300 grams within the country. In addition, the Bill – if passed by Parliament and made into an Act – will not only block foreign ownership of express couriers in the country but will also take away a hefty 10 percent of profits made by express companies.
     The funds so accumulated will be utilized by the government to enhace postal services in rural areas.
     The Bill has, obviously, created a furor. On its part, the Express Industry Council of India (EICI - primarily aims to protect and promote the common interests of Express Industry and its members) has shot off a memorandum to the concerned ministry pointing out that it wanted clarifications.
     "We welcome the move to keep pace with the changing needs of the emerging global environment. However, the Bill in its present form is detrimental to India's global competitiveness.
     This is because the Bill will erode significantly the technological and communications efficiency, as well as the competitive gains that have been attained by the customers of the Indian express operators and other courier operators. Indeed, provisions of this Bill could have a chilling effect in India's ability to increase its foreign direct investment, thereby limiting India's growth potential. The proposal would also eliminate competition in a service segment, which supports trade and commerce, and would result in increases in costs of doing business in India while decreasing service standards."
     UPS India's managing director, Pirojshaw Sarkari (left), has gone ahead to say that his company and others like UPS were working to show the authorities concerned international best practices with regard to the basic principles on which the express industry and national postal services should interact, such as by having an independent regulator for the industry and a level playing field in the competitive services market between the national post and the private sector.
     Whatever the outcome of the Bill, express industry insiders hope that the postal authorities will see reason and the changing global scenario.
     Perhaps, the government high-ups will take note of what Franklin L. Lavin said in Mumbai not so very long ago, "UPS and other companies are making investments because India is open for business. That India is committed to trade liberalization. And that India is interested in open markets and the benefits they bring … Companies like UPS only ask for the ability to compete fairly for the business of Indian consumers. They deserve that opportunity, just as Indian companies deserve the opportunity to compete for business in America."
     The U.S. Under Secretary had also said that "my counterparts in the Indian Government understand this and we will continue to work together to keep express delivery services as part of the growth engine of the Indian economy".
Tirthankar Ghosh