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Indian Railways

January, 2015


The Indian Railways is among the world’s largest railway networks and has strongly emerged as the main vehicle for the country’s socio economic development. 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 1st April 2014 to 30th November 2014 were Rs 100,622 crore (US$ 1.72 billion) compared to Rs 89,341.26 crore (US$ 14.49 billion) during the same period last year, registering an increase of 12.63 per cent. The total approximate earnings from goods during April 1, 2014–November 30, 2014 were Rs 67,130.96 crore (US$ 10.89 billion) compared to Rs 60,144.16 crore (US$ 9.76 billion) during the same period last year, registering an increase of 11.62 per cent.

The total approximate revenue earnings from passengers during April 1, 2014–November 30, 2014 were Rs 28,510.24 crore (US$ 4.62 billion) compared to Rs 24,523.71 crore (US$ 3.97 billion) during the same period last year, registering an increase of 16.26 percent.

The approximate revenue earnings from other coaching amounted to Rs 2,669.55 crore (US$ 433.05 million) during April – November 2014 compared to Rs 2,515.78 crore (US$ 408.16 million) during the same period last year, registering an increase of 6.11 per cent.

The Indian Railways has generated Rs 66,211.42 crore (US$ 10.74 billion) of revenue earnings from commodity-wise freight traffic during April-November 2014 as compared to Rs 59,069.73 crore (US$ 9.58 billion) during the corresponding period last year, registering an increase of 12.09 per cent. Railways carried 713.11 million tonnes (MT) of commodity-wise freight traffic during April-November 2014 as compared to 677.58 MT carried during the corresponding period last year, registering an increase of 5.24 per cent.


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

  • To expand its footprint in the solar energy space, Indian Railway is in the process of formulating a ‘Solar Policy’ of procuring 1,000 megawatt (MW) Solar Power under viability gap funding support and Central Financial Assistance schemes of Ministry of New and Renewable Energy (MNRE) over the next 5 years.
  • Indian Railways has proposed to install solar power plants of about 8.8 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 SPV plants at 2,000 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.

Government Initiatives

The Ministry of Railways in November, 2014 issued Sectoral Guidelines for permitting Domestic/Foreign Direct Investment (FDI) in construction, operation and maintenance in the following identified areas:-

i) Suburban corridors through Public Private Partnership (PPP), ii) High Speed train projects, iii) Dedicated freight lines iv) Rolling stock including trains sets and locomotive/coaches manufacturing and maintenance facilities v) Railway electrification vi) Signalling system vii) Freight terminals viii) Passenger terminals ix) Testing facilities and laboratories x) Non-Conventional Sources of Energy xi) Railways Technical Training Institutes xii) Concessioning of standalone passenger corridors (branch lines, hill railways etc.) xiii) Mechanized laundry, xiv) Rolling stock procurement, xv) Bio-toilets, xvi) Technological solution for manned and unmanned level crossings, xvii) Technological solutions to improve Safety and reduce accidents. The guidelines will encourage foreign investors for making investment under ‘Make in India’ programme. An ‘Investors Meet’ was also held on 5th December 2014 to encourage foreign investors in making investments.

Indian Railways is now coming out with a new rating system with confidence of industry kept in mind, according to Mr N Sreekumar, Chief General Manager of Container Corporation of India Limited. Addressing an event organised by Indian Institute of Logistics, Mr Sreekumar also said the government is going to restructure the railway board. He also stated that the total logistics sector in India would undergo a transformation with the east and west freight corridor coming into being.

Promising "watershed development" of Indian railways, Union minister for railways Mr Suresh Prabhu has announced a series of reforms in the rail sector, including the introduction of remote sensing technology to improve safety, rail bookings on mobile phones and wi-fi at railway stations.

  • 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.

Road Ahead

The already massive network of the Indian Railways is growing at a healthy rate, given the rise in population and a growing economy that offers immense growth potential. In the next five years, the Indian railway market will be the 3rd largest, accounting for 10 per cent of the global market, with Metro rail going to be 70 per cent of the railway market in India.

Exchange Rate: INR 1 = US$ 0.0162 as on January 21, 2015

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