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Indian Railways

May, 2014


Indian Railways is one of the biggest in the world. It has a total route network of about 64,600 km spread across 7,146 stations, and operates over 19,000 trains every day.

The Railways carried freight traffic of 975 million metric tonnes (MMT) in 2012 and is expected to carry 1,405 MMT by 2017. Further, increasing urbanisation is driving the growth of passengers.

The Government of India has invested heavily to improve railway infrastructure, by relaxing norms and making appropriate policies. Over FY 2008–2012, foreign direct investment (FDI) participation increased steadily. From April 2000–August 2013, cumulative FDI inflows totalled US$ 366.3 million. Private sector companies are today encouraged to take part in rail projects, which is helped largely by the Cabinet’s approval of a policy in December 2012 which allowed for private ownership of some railway lines.

Market Size

The total approximate earnings of Indian Railways on originating basis during FY 2013–14 were Rs 140485.02 crore (US$ 23.14 billion) compared to Rs 121831.65 crore (US$ 20.06 billion) during the same period of FY 2012–13.

The total goods earnings during FY 2013–14 were Rs 94925.02 crore (US$ 15.63 billion) as against Rs 82852.54 crore (US$ 13.64 billion) during the corresponding period of FY 2012–13.

The total passenger revenue earnings during FY 2013–14 were Rs 37478.03 crore (US$ 6.17 billion) as against Rs 31896.22 crore (US$ 5.25 billion) during the same period in FY 2012–13.

The total approximate numbers of passengers booked during FY 2013–14 were 8535 million as against 8602.12 million during the corresponding period of FY 2012–13.

In the suburban and non-suburban sectors, the numbers of passengers booked during FY 2013–14 were 4549.85 million and 3985.15 million, respectively, as against 4473.38 million and 4128.74 million during the corresponding period of 2012–13.

Recent Developments

In a move to enhance energy efficiency on Indian Railways, a web-based Electrical Energy Management System was inaugurated by Mr Kul Bhushan, Member Electrical, Railway Board in April 2014. The portal, RAILSAVER, has been developed by Centre of Railway Informatics System (CRIS), an autonomous organisation under the Railway Ministry. The portal is useful for tackling the challenges of global warming and sustainability of the environment.

The Rail Coach Factory (RCF) produced a record number of coaches in FY 2013–14, reaching a mark of 1701 coaches against installed capacity of 1500 coaches per annum. During the fiscal, the factory made 23 different variants of coaches for high-speed trains like Shatabdi, Rajdhani and other trains. Apart from its own production, 150 unfurnished coaches were also manufactured for RCF Rae Bareli, a new production unit of Indian Railways.

By 2016, Indian Railways may bring in liquefied natural gas (LNG)-based locomotives. Russian companies have shown interest in the project. This is the first time Indian Railways is looking past traditional fuels such as coal, diesel, electricity and bio-diesel. “The initial costs are expected to be very high; the engineering design has been done,” said Railway Board Chairman, Mr Arunendra Kumar.

Commuters could be travelling in high-speed trains in India in the near future, with Indian Railways focusing on bringing new technology to modernise trains. The first high-speed rail (300–350 km/hour) is likely to connect Mumbai and Ahmedabad, two of western India’s most influential financial hubs. The train is expected to cut travel time between these two cities to two hours, from the current eight hours. The Railways is also trying to achieve speeds of 160–200 km/hour on existing tracks.

Government Initiatives

The Asian Development Bank (ADB) and the Government of India signed loan agreements worth about US$ 605 million for three separate projects, in February 2014. The projects will aim to enhance rail services, power and roads in India. To better rail services along some of the most critical freight and passenger transport routes, a US$ 130 million loan has also been signed, which is part of the US$ 500-million Railway Sector Investment Programme that was approved by ADB in 2011.

The Ministry of Home Affairs has approved the proposal of allowing foreign direct investment (FDI) in railways. The Ministry of Railways is also keen on getting FDI, especially through public–private partnership (PPP) projects. Once the FDI proposal is cleared by the Cabinet Committed on Economic Affairs (CCEA), foreign investors can hold stake in special-purpose vehicles (SPVs) meant for PPP in construction projects. The move could help the Indian Railways to achieve its target of Rs 60,000 crore (US$ 9.88 billion), through different projects.

The Union Cabinet has given the green signal for establishing a new rail coach manufacturing unit at Kolar, Karnataka. The unit will produce 500 coaches per annum at a projected cost of Rs 1460.92 crore (US$ 240.56 million) excluding the cost of land, with active participation of the state government. The Ministry of Railways will provide 50 per cent of the outlay with the Government of Karnataka providing land, free of cost, and the other 50 per cent of the project completion cost with escalation.

Road Ahead

The already vast network of Indian Railways is growing. An outlay of US$ 95.6 billion has been approved by the Planning Commission for the Railways, for the 12th Five-Year Plan. Freight traffic is set to increase manifold, due to investments and the participation of the private sector. Indian Railways has set a target of freight market share of 50 per cent by 2030, from 30 per cent in 2010. Furthermore, investments are expected in metro rail networks in the country to the tune of US$ 42 billion by 2020.

Exchange Rate: INR 1 = US$ 0.01644 as on April 21, 2014

References: Press Releases, Department of Industrial Policy and Promotion, Press information Bureau