Indian Railways

Introduction

The Indian Railways is among the world’s largest rail networks. The Indian Railways route length network is spread over 115,000 km, with 12,617 passenger trains and 7,421 freight trains each day from 7,349 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. Indian Railways was the preferred carrier of automobiles in the country with loading from automobiles traffic growing 16 per cent in 2017-18.

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

Indian Railways’ revenues increased at a CAGR of 9.66 per cent during FY07-FY18 to US$ 27.71 billion in FY18. Earnings from the passenger business grew at a CAGR of 9.90 per cent during FY07-FY18 to reach US$ 7.55 billion in 2017-18P. Freight revenue rose at a CAGR of 9.83 per cent during FY07-FY18 to reach US$ 18.16 billion in 2017-18.

Investments/ Developments

Foreign Direct Investment (FDI) inflows into Railways Related Components from April 2000 to June 2018 stood at US$ 920.21 million.

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

• In March 2018, Alstom completed production of the first all-electric locomotive at the manufacturing facility in Madhepura, Bihar.
• In May 2018, Parcel Cargo Express Train (PCET) commenced operations. The train connects the North-Eastern region with the coast as its initial and penultimate stops are New Guwahati in Assam and Kalyan in Maharashtra.

Government initiatives

Few recent initiatives taken up by the Government are:

• The Government of India is going to come up with a ‘National Rail Plan’ which will enable the country to integrate its rail network with other modes of transport and develop a multi-modal transportation network.
• A 'New Online Vendor Registration System' has been launched by the Research Designs & Standards Organisation (RDSO), which is the research arm of Indian Railways, in order to have digital and transparent systems and procedures.
• Indian Railways is targeting to increase its freight traffic to 3.3 billion tonnes by 2030 from 1.1 billion tonnes in 2017.
• The Government of India has signed an agreement with the Government of Japan under which Japan will help India in the implementation of the Mumbai-Ahmedabad high speed rail corridor along with a financial assistance that would cover 81 per cent of the total project cost.
• To enhance transparency in the processing and settlement of bills, Indian Railways has come up with a new bill tracking system for contractors/vendors of Indian Railways to track status of their bills.
• With the aim of boosting connectivity between India and Bangladesh, Mr Narendra Modi, Prime Minister of India, and Ms Sheikh Hasina, Prime Minister of Bangladesh, launched various connectivity projects including a new passenger train service between Kolkata and Khulna.

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$ 0.0149 as of Q1 FY19.

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

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.