India amends FDI to allow foreign airline investment
The Indian government announced an amendment to its foreign investment rules last week, allowing foreign companies to invest in Indian supermarkets and airlines.
Foreign investors can invest for up to a 49 percent stake in Indian carriers, which have been financially troubled over the last three years. Kingfisher, SpiceJet and Go Air are three airlines looking for fresh capital, and have lobbied for the rule change which would allow them to bring in strategic partners.
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Foreign airlines can now invest in Indian carriers which operate scheduled and non-scheduled services. Despite the rule change, however, potential investors will still encounter restrictions. Subject to approval from the Indian government, two-thirds of directors at an Indian carrier must be Indian citizens.
Several international carriers, such as Singapore Airlines and Lufthansa have unsuccessfully tried to enter the Indian market in the past. A stake in an Indian carrier could change the ‘capacity crunch’ that a number of carriers face, who continually keep pushing the government for the rights to fly more, in addition to giving airlines access to dozens more cities.
Despite the move by the Indian government, it is expected that the decision to allow new investors may have come too late for Kingfisher, whose founder Vijay Mallya has for many years been an active and vocal lobbyist against the ban on foreign airline investment. The airline has curtailed operations by almost 70 percent, shouldering heavy debts.
Update: SpiceJet have reportedly begun 'very preliminary' talks with a number of gulf carriers, and could be expecting to gain investment this fiscal year.
Cainiao Network Launches Customer-Centric Logistics
As the logistics division of the Alibaba Group, Cainiao Smart Logistics Network has decided to provide its Southeast Asian customers with unsurpassed service during its annual shopping festival. Based on customer feedback surveys, the company will expand its real-time customer service support and speed up delivery times. ‘By expanding and deepening our services, we aim to provide a stronger logistics infrastructure that can bolster the booming eCommerce sector, support merchants’ expansion into new markets and diversify retail options for consumers’, said Chris Fan, Head of Cross-Border, Singapore, Cainiao Network.
Who Is Cainiao?
According to TIME Magazine, Cainiao ‘is far from a typical logistics firm’. The company controls an open platform that allows it to collaborate with 3,000 logistics partners and 3 million couriers. This means that merchants can choose the least expensive and most efficient shipping options, based on Cainiao’s real-time logistics analytics. The company’s goal is to ship packages anywhere in the world in under 72 hours—and for less than US$3.00.
For countless small business owners around the world, from coffee-growers to textile-weavers, this could change everything. Usually, it costs about US$100 to ship a DHL envelope from Shanghai to London in five days. Cainiao aims to change that. Said its CEO Wan Lin: ‘The biggest barrier to globalisation is logistics’.
What’s Part of the Upgrade?
Throughout the Tmall festival, Cainiao’s logistics upgrade will be divided into four critical segments:
- Real-time customer service support. Cainiao has launched a direct WhatsApp channel for customers to receive logistics updates and ask questions.
- Expansion of air freight parcel size and weight limits. Packages can now be up to 30 kilograms or 1-metre x 1.6 meters to help ship large items such as furniture.
- Daily air and sea freight connections. Shipping frequency will almost double to seven times weekly to maintain resilience and efficiency.
- Compensation for lost or damaged packages. Customers will be reimbursed up to RMB 2,000 (US$311).
Where is the Company Headed?
From June 1st to June 20th, the finale of Tmall, Cainiao will ensure that its customers feel confident in the company’s ability to deliver their packages. Despite global shipping delays due to COVID, the show will go on. Said Fan: ‘This series of customer-centric logistics upgrades reaffirms our goal of pursuing value-added services to enhance customers’ shopping experience while mitigating challenges posed by external factors’.
Furthermore, Cainiao has recently expanded its Southeast Asian operations, achieving revenue growth of 68% year-over-year. In Malaysia, the logistics operation has partnered with BEST Inc. and Yunda; in Singapore, the company has partnered with Roadbull, Park & Parcel, and the Singapore Post. And if its recent measures help retain and grow its customer base, the company will be well-poised to lead the industry in resilient and customer-centric global logistics. ‘COVID-19 made everyone realise how important the logistics infrastructure backbone is’, said Wan. ‘And it gave us a peek at what Cainiao should look like in three years’.