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Railways

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Indian Railways

October, 2014

Introduction

The Indian Railways is among the world’s largest. It caters to the transportation needs of the country, while also bringing together the diverse geographies and assisting in promoting national integration. Furthermore, the railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy efficient and economic mode of conveyance and transport. The 64,600-km network is spread across 7,146 stations, with 19,000 trains operating the routes daily.

India's railway network is recognised as one of the largest railway systems in the world under single management. The Government of India has focused on investing on railway infrastructure by making investor-friendly policies. It has moved quickly to enable foreign direct investment (FDI) in railways to improve infrastructure for freight and high-speed trains. At present, private sector companies are also looking to invest in rail projects.

Market size

The total approximate earnings of Indian Railways on originating basis during April 1, 2014–August 31, 2014 were Rs 61,324.64 crore (US$ 10.02 billion) as against Rs 54,496.73 crore (US$ 8.91 billion) during the corresponding period of 2013, registering a rise of 12.53 per cent.

The total approximate earnings of the Indian Railways on originating basis during FY14 were Rs 140,485.02 crore (US$ 22.94 billion) as against Rs 121,831.65 crore (US$ 19.89 billion) during FY13.

The total approximate earnings from goods during April 1, 2014– August 31, 2014 were Rs 40,879.09 crore (US$ 6.67 billion) as against Rs 37,103.34 crore (US$ 6.05 billion) during the corresponding period of 2013, which is an increase of 10.18 per cent.

The total goods earnings during FY14 were Rs 94,925.02 crore (US$ 15.5 billion) compared to Rs 82,852.54 crore (US$ 13.53 billion) in FY13.

The total approximate numbers of passengers booked during April 2014 were 685.85 million, with passenger revenue earnings standing at Rs 3,406.76 crore (US$ 556.66 million). In the period FY07-13, revenues from the passenger segment increased at a compound annual growth rate (CAGR) of 10.9 per cent.

Investments

The following are some of the major investments and developments in India’s railways sector:

Indian Railways proposes to install solar power plants of about 8.8 megawatt (MW) capacity at railway stations, railway office buildings and level crossing gates throughout the country through railway funding. These include – provision of 10 KWp solar PV modules each at 200 stations under various Zonal Railways, provision of total 4.05 MWp Solar Photo Voltaic (SPV) at roof top of 21 railway office buildings and provision of total 1.3 MWp capacity Solar Photo Voltaic (SPV) plants at 2000 Level Crossing gates on Indian railways.

In a move to offer hassle-free services to railway users, the Minister of Railways, Mr SD Sadananda Gowda launched new IT initiatives/applications in August. These initiatives have been developed by Centre for Railway Information Systems (CRIS), an independent organisation under the Ministry of Railways.

The Indian Railways is gearing up for a nationwide rollout of the Swachch Bharat (Clean India) scheme at an unprecedented scale. Railways minister Mr Sadananda Gowda has directed 1.3 million employees of the Railways to either participate by cleaning stations or spread awareness on the topic.

The detailed project report (DPR) of the Kochi metro rail Phase–II which expands the metro's reach to Cochin International Airport and Angamaly town, is in final stages and will be released shortly, as per Kochi Metro Rail Ltd (KMRL). Phase-II will connect the western and northern suburbs of Kochi.

In an effort to decongest Bengaluru, and urge industries to move to other parts of Karnataka, the state government of Karnataka is in discussions with the Ministry of Railways to introduce more non-stop train services between Bengaluru and Mysore.

Karnataka will also provide Rs 540 crore (US$ 88.24 million) towards its share of costs for the ongoing railway projects in 2014, as per state chief minister Mr Siddaramaiah. The government had committed to extending assistance to the rest of the projects under the 2010 cost-sharing agreement, as per the chief minister.

Government Initiatives

A Memorandum of Understanding (MoU) and an Action Plan have been signed between the Government of India and the People's Republic of China to improve technical cooperation in the railways sector, at delegation level talks between the two countries. The Prime Minister of India Mr Narendra Modi and the visiting President of China, Xi Jinping, were present at the signing.

An MoU was signed in August at Rail Bhawan, New Delhi between the Ministry of Railways of the Republic of India and Czech Railways (Ceske Drahy) and Association of Czech Railway Industry (ACRI) of the Czech Republic on technical cooperation in the field of the railways sector, by Mr Arunendra Kumar, Chairman/Railway Board and Mr HE Miloslav Stasek, Ambassador of Czech Republic.

The government has cleared a proposal to allow 100 per cent FDI in railway infrastructure, barring operations, via the automatic route. FDI channeled through this route does not require prior government approvals.

The Railway Board is considering the implementation of the 106 recommendations of the High Level Safety Review Committee (Kakodkar Committee) pertaining to general safety matters, empowerment at working level, vacancies in critical safety category, organisational structure, shortage of critical safety spares, human resource development with focus on education and training research, and safety architecture, among others.

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 1,460.92 crore (US$ 238.74 million) excluding the cost of land, with active participation of the Karnataka government. The Ministry of Railways will provide 50 per cent of the finances with the Karnataka government providing land, free of cost, and the remaining 50 per cent of the project completion cost with escalation.

Road Ahead

The already massive network of the Indian Railways is increasing at a healthy rate. To meet this demand, an outlay of US$ 95.6 billion has been sanctioned for the sector by the Planning Commission for the 12th Five-Year Plan. Freight traffic may also increase with investments and active participation of the private sector. There will be no shortage of investments though, with US$ 42 billion likely to be pumped into India’s metro rail networks by 2020.

Exchange Rate: INR 1 = US$ 0.0163 as on October 28, 2014.

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