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January, 2012

The Indian Railways is one of the largest developed networks in the world and is the major catalyst to infuse socio-economic growth in Indian economy. India has the world's fourth largest rail network, which is also the second largest organisation under a single management. The total route network of Indian Railways (IR) ranges to about 64,000 kilometers (km), spreading across 7,000 stations with more than 18,000 trains operating every day. Over 22 million passengers travel by trains on a daily basis in India.

In addition, around 2.5 million tonnes (MT) of freight is transported via trains on a daily basis. These include a huge variety of goods like mineral ores, iron and steel, fertilisers, petrochemicals, and agricultural produce.

Sector Structure/ Market Size

The Railways budget 2011-12 earmarks an outlay of US$ 12 billion, the highest ever so far. The Indian Railways has set a target of having a freight market share of 50 per cent by 2030 from 30 per cent in 2010.

The total revenue generated by Indian Railways is estimated to be worth US$ 22.1 billion in 2011-12. Freight is the major revenue earning segment for the railways, accounting for 74 per cent of the total. Freight traffic aggregated to 1,020 MT in 2010-11.

Indian Railways have generated Rs 49,209 crore (US$ 9.71 billion) of revenue earnings from commodity-wise freight traffic during April-December 2011 as compared to Rs 44,789 crore (US$ 8.83 billion) during the corresponding period last year, registering an increase of 4.59 per cent.

Railways carried 705 MT of commodity-wise freight traffic during the period as compared to 673 MT carried during the corresponding period last year, registering an increase of 4.68 per cent.

The Net Tonne Kilo Metres (NTKM) went up from 444,515 million during April-December 2010 to 466,968 million during April-December 2011, showing an increase of 4.68 per cent.

The South Central Railways has recorded a 10 per cent rise in gross earnings at Rs 5,827 crore (US$ 1.15 billion) during the April-December 2011 period, as against Rs 5,302 crore (US$ 1.05 billion) in the year ago period. Freight loading accounted for about 70 per cent of the earnings. In the freight segment, the zone has loaded 74.5 MT of cargo, up by 6.6 per cent. The South Central Railways press release highlighted that the coal was the main contributor, accounting for 50 per cent of the total freight loading, followed by food grains and fertilisers.

The cumulative foreign direct investment (FDI) inflow into the sector railways related components has been recorded US$ 226.28 million from April 2000 to October 2011, according to the Department of Industrial Policy and Promotion (DIPP).

Industry Initiatives

  • The World Bank has signed a US$ 975 loan agreement with the Indian Government to build the Eastern Dedicated Freight Corridor (DFC) that will help in faster and more efficient movement of raw materials and finished goods between the Northern and Eastern parts of India. "Augmenting its transport systems is a crucial element of India's trillion-dollar infrastructure agenda for the next Five-Year Plan (XIIth Plan) which starts in 2012," according to Mr Venu Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance. "Implementing the DFC program will provide India the opportunity to create one of the world's largest freight operations, adopting proven international technologies and approaches which can progressively be extended to other important freight routes throughout the network," as per Roberto Zagha, World Bank's Country Director in India
  • The Railway Sector investment programme was approved by Asian Development Bank (ADB) Board on August 31, 2011 as a Multi-tranche Financing Facility (MFF) for US$ 500 million, with 1st tranche of US$ 150 million approved on October 18, 2011
  • Indian Railways has an established system of emergency response system which consist of a network of Accident Relief Trains (ARTs) and Accident Relief Medical Vans (ARMVs) placed at identified locations which include most of the important Railway stations and covers the entire rail network of Indian Railways. The ARMVs and ARTs are equipped with rescue and relief equipments required to be used at the accident site
  • The first phase of the Real Train Information System, based on the satellite imaging for rail navigation has been opened by the Railway. It has been mutually developed by the Research Design and Standards Organisation and IIT-Kanpur. After the implementation of new system the movement and location of each train will be tracked on a realtime basis. "We will commence installation of the Mobile Satellite Service (MSS) system from the next week covering 107 locomotives that run on the Chennai section. The installation of the technology will be completed by February of next year," highlighted P Bala Bhaskar Rao, VP (Operations), Avantel Ltd
  • Escorts Ltd, a leading manufacturer of critical railway components, has entered into an exclusive license and technology assistance agreement with Honeywell, a US-based Fortune 100 Company, for providing technology on friction materials for railway application. Escorts Ltd has been manufacturing and supplying various products to the Indian Railways
  • The Delhi Metro Rail Corporation (DMRC) has inked a deal to procure 76 coaches from the Canadian company Bombardier. The US$ 120 million order was placed by Delhi Metro, which now has a length of 185 km and 2 million passengers. The coaches will be used to commission the first eight-coach trains on the HUDA city centre-Jehnagirpuri corridor in May 2013
  • The Northern Railways has opened India's longest railway tunnel through the Pir Panjal range in Jammu & Kashmir. The tunnel which is 10.96 km long is India's longest and Asia's second longest tunnel. The total cost of the tunnel was Rs 391 crores (US$ 77.12 million)
  • Himachal Pradesh has entered into an agreement with the Indian Railway Catering and Tourism Corporation Ltd (IRCTC) for opening four restaurants in the state, as per an official statement. A memorandum of understanding (MoU) has also been signed for the same
  • The i-tickets, which are booked online by passengers but printed by the Railways and delivered through courier, have now been overtaken by e-tickets. In 2011, only about 0.4 per cent of total train tickets booked on the Internet were i-tickets, the rest being e-tickets