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Indian Railways

January, 2018

Introduction

The Indian Railways is among the world’s largest rail networks. The Indian Railways network is spread over 115,000 km, with 12,617 passenger trains and 7,421 freight trains each day from 7,172 stations plying 23 million travellers and 3 million tonnes (MT) of freight daily. India's railway network is recognised as one of the largest railway systems in the world under single management.

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 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, several domestic and foreign companies are also looking to invest in Indian rail projects.

Market Size

During FY 2016-17, the passenger traffic of Indian Railways grew 0.8 per cent to 8,219.38 million, with passenger revenue growth of 4.6 per cent at Rs 47,449.75 crore (US$ 7.37 billion). The overall revenue of Indian Railways grew 8.7 per cent year-on-year to Rs 15,884.58 crore (US$ 2.47 billion) during March 2017. The passenger earnings grew 10.1 per cent to Rs 4,205.29 crore (US$ 652.90 million) and the freight earnings grew 4.1 per cent to Rs 10,273.20 crore (US$ 1.60 billion) during March 2017.

The revenue generated by the Railways is expected to grow at 10 per cent in the fiscal year 2017-18. The Union Budget 2017-18 has estimated that the overall earnings will rise to Rs 189,498.37 crore (US$ 28.42 billion) in 2017-18, compared to Rs 172,305 crore (US$ 25.84 billion) in the fiscal year 2016-17.

Investments/ Developments

Foreign Direct Investment (FDI) inflows into Railways related components from April 2000 to June 2017 were US$ 812.21 million.

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

  • With eight metro rail networks spread over a length of 370 kilometres (km) and over two dozen metro projects lined up, India’s metro rail network is expanding at a fast pace. The Government of India has allocated Rs 17,960 crore (US$ 2.79 billion) for metro rail companies in FY 2017-18.
  • An Electronic Interlocking and Yard Remodelling has been commissioned at Dadri Railway Station in Uttar Pradesh in a record time of only 150 minutes, which is expected to improve mobility in train operations on the Delhi Howrah section of Indian Railway network.
  • Union Ministry of Railways plan to cover the length and breadth of Arunachal Pradesh by rail network requiring an initial investment of around Rs 50,000–70,000 crore (US$ 7.76-10.87 billion) at an elevation range of 500 to 9,000 feet.
  • A Universal Rail Mill worth Rs 1,200 crore (US$ 180 million) was inaugurated at Steel Authority of India's (SAIL’s) Bhilai Steel Plant by Mr Birender Singh, Union Minister of Steel, which will produce world’s longest single rail of 130 meters.
  • The Indian Railways plans to set up a US$ 5 billion Railways of India Development Fund (RIDF) for investments of it projects.
  • The Indian Railways is looking to award six tenders worth Rs 8,000 crores (US$ 1.2 billion), for setting up a country-wide electricity transmission network, as part of a strategy to reduce electricity bills.
  • Mr Nitin Gadkari, Minister for Road Transport and Highways and Shipping, has stated that India will likely collaborate with Germany for projects worth Rs 1 trillion (US$ 15 billion), aimed at enhancing railway connectivity of Indian ports and identifying environment-friendly technology for scrapping of old vehicles.
  • • Mr Suresh Prabhu, Railway Minister of India, has unveiled Mission 41k initiative, aimed at saving Rs 41,000 crore (US$ 6.15 billion) on the Indian Railways' expenditure on energy consumption over the next 10 years by doubling the annual rate of electrification from 2,000 km to 4,000 km in the next two years.

Government initiatives

Mr Arun Jaitley, Finance Minister of India, announced the following reforms in the Railway sector in the Union Budget 2017-18.

  • The Government will provide Rs 55,000 crore (US$ 8.25 billion) towards capital and development expenditure of Railways
  • A fund named Rashtriya Rail Sanraksha Kosh worth Rs 100,000 crore (US$ 15 billion) will be created, which will be directed towards passenger safety
  • All the coaches of the Indian Railways will be fitted with bio toilets by the year 2019
  • Railway lines of 3,500 kms will be commissioned in 2017-18.

The other initiatives taken up by the Government are:

  • The Ministry of Railways is working on building the world’s highest railway bridge over the Chenab river in Jammu and Kashmir at a cost of around Rs 1,100 crore (US$ 170.79 million), which is expected to be 359 meters (m) above the river bed, 35 m taller than the Eiffel Tower.
  • The Indian Railways has introduced various initiatives to improve passenger travel experience, which include finalisation of first reservation chart at least 4 hours before departure, and numerous online booking facilities like wheelchair and disposable bedrolls through Indian Railway Catering and Tourism Corporation (IRCTC) website, among other initiatives
  • The Railway Minister of India has launched the first phase of station redevelopment programme, covering commercial redevelopment of 23 out of 400 A1 and A category stations across the country.
  • Union Ministry of Railways plan to cover the length and breadth of Arunachal Pradesh by rail network requiring an initial investment of around Rs 50,000 – 70,000 crore (US$ 7.4 - 10.4 billion)at an elevation range of 500 to 9,000 feet.
  • The Ministry of Railways has signed a memorandum of understanding (MoU) with the Ministry of Urban Development, under which railway stations in each city included in the SMART Cities and AMRUT scheme will be redeveloped to create an integrated public transit hub around the railway stations and encourage transit oriented development.
  • The Government of India and The World Bank have signed a US$ 650 million loan agreement for the Eastern Dedicated Freight Corridor-III (EDFC-III) project, which is expected to enhance railway transport capacity, improve service quality and boost freight carriage on the 401-km- long Ludhiana-Khurja section of the EDFC, along with developing institutional capacity of Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) to build, maintain and operate the entire network.

Road Ahead

The Indian Railway network is growing at a healthy rate. In the next five years, the Indian railway market will be the third largest, accounting for 10 per cent of the global market. Indian Railways, which is one of the country's biggest employers, can generate one million jobs, according to Mr Piyush Goyal, Union Minister for Railways and Coal.

In order to develop three new arms of Dedicated Freight Corridor (DFC) in the various regions of the country, Indian government is planning to invest Rs 3,30,000 crores ($50.98 billion). Also, Indian Railways is planning to invest in order to adopt European Train Control Systems (ETCS) which will help in the development of the infrastructural facilities.

Exchange Rate Used: INR 1 = US$ 0.015 as of October 10, 2017.

References: Press Releases, Department of Industrial Policy and Promotion, Press information Bureau, Media Reports, Railways Budget 2016-17