The commercial and industrial applications, namely, business form reading, bank cheque reading, and full postal address reading, have constituted the majority of the market for handwriting recognition technology. Devanagari is the most popular script in India and is used to write texts in Hindi, Marathi and Nepali languages. Significant amount of work has been done on Devanagari isolated characters. Very few attempts have been made for Indian postal system automation. This paper presents the challenges involved in Indian postal system automation with a case study. This paper also throws light on the existing research literature support available for doing the postal automation.