Courier Prices Set to Increase to Rs. 70 minimum – DoP Act

It has been reported by Business Standard today that Department of Posts (DOP) in the country has been working on amending the century old Indian Postal Act. These amendments are supposedly in the final stages and will soon be moved to Parliament for a discussion. These proposed amendments are going to have a negative impact on the e-commerce industry when it comes to shipping products.

The new amendments if approved will increase the shipping price of goods delivered across the country. Packages which weigh 500 gm will now cost a minimum of Rs.70 to deliver when it comes to outstation shipping. The amendments say that private shipping and logistics companies will have to charge double of the standard Speed Post rate which is Rs.35 for anything which weighs 500 gm. This will increase the delivery cost of goods for shipping and logistics companies to more than double of the market cost. Apparently, a 51gm package can be delivered currently at a cost ranging from Rs.30 to Rs.40 by many courier providers. This regulation will force courier companies to increase prices and drive us costs for Indian online sellers.

The DoP feels that private players are cannibalizing its service offerings. It offers courier services at a subsidized cost. Private courier companies are offering their services at this cost and in many cases they are cheaper than the DoP rates. This is probably because they are going about efficiently with the process compared to the DoP. So, in this case private players are being victimized for something that is the DoP’s fault. These amendments are thus going to negatively impact the sector and there is a need to discuss these amendments thoroughly before they get through. The DoP should clean up its act and get competitive with its service offerings.

Another aspect of the amendments is that courier companies will now have to setup grievance redressal, track and trace facility and compensation processes and there will be a regulatory body along the lines of the TRAI in the telecom industry which will look into the malpractices happening in the courier industry which is largely known to be unorganized.

Now, in order to reduce costs for the end customer under the new amendments, sellers, marketplaces and e-commerce sites will be forced to use the DoP’s Speed Post service, which is not supposed to be reliable on the massive scale that e-commerce in the country requires. This is a clear example of lack of choice stemming from unfair and anti-competitive legislation.

What are your thoughts on this situation? We would like to hear them in the comments.

Story Source | Business Standard