The Indian express industry is set for sizzling growth, despite rising usage of facilities like short messaging services or multimedia message services.

If anything, several large-sized corporates and multinational express players are keen on acquiring controlling stake in some of established Indian courier companies.

The reason: India's express industry is expected to register a growth of at least 20 per cent per annum during the next five years and more than double its size by 2012, according to a study by rating agency Credit Analysis & Research.

Opening of banking, insurance, retail, aviation and telecom sectors and their penetration to smaller cities would be the major growth driver.

According to CARE, the size of India's courier industry currently stands at around Rs 7,100 crore (Rs 71 billion) and is estimated to have grown at a CAGR of around 33 per cent over the past decade. At its current estimated size, the courier industry is larger than the tea industry and close to the size of paper and shipping industries in India.

The industry ranks amongst the fastest growing segments of the Indian economy and over the next five years, it is expected to register a growth rate higher than of industries such as retail, banking, financial, chemical and automobiles.

The industry is highly fragmented with more than 2500 express players and a few large sized players account more than half of the industry revenues.

The industry contributes more than Rs 1000 crore (Rs 10 billion) to the government revenues by way of service tax, income tax and other levies and it offers employment opportunity to about a million people.

According to an Edelweiss Research study, the organised part of the express industry in India is 65 per cent of the total market.  "Organised sector in the domestic market is little less than 50 per cent. The unorganised and semi organised segments, which consist largely of regional and intra-city service providers and EMS Speedpost, account for the rest," it says.

"The organised segment, including the international majors' share, constitutes approximately 65 per cent of the total and is made up of a small group of fewer than two-dozen players," Edelweiss adds.

Amongst domestic players Blue Dart, DTDC, First Flight and Overnite Express are leading express services companies in India while UPS, FedEx, DHL and TNT are leading international players presence in the country.

According to the CARE survey, the industry players earn about 52 per cent of its revenues from document parcels.

Document parcels weighing less than 300 grams account for about 70 per cent of the volume of document parcels and intra-city deliveries account for nearly 37 per cent of their turnover.

Challenges faced by the industry include matching upto the rising expectations of the customer, expanding the network to reach hitherto uncovered areas, containing rising fuel and freight costs and retention of manpower.