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Indian Railways Industry

    Last updated on Sep, 4 2020

Indian Railways Industry Report  (Size: 490.94 KB ) (August, 2020)

Introduction

Indian Railways is among the world’s largest rail network. Indian Railways route length network is spread over 1,23,236 kms, with 13,452 passenger trains and 9,141 freight trains plying 23 million travellers and 3 million tonnes (MT) of freight daily from 7,349 stations. 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 is the preferred carrier of automobiles in the country.

Government of India has focused on investing in 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’ revenue increased at a CAGR of 6.20 per cent during FY08-FY19 to US$ 27.13 billion in FY19. Earnings from the passenger business grew at a CAGR of 6.43 per cent during FY07-FY19 to reach US$ 7.55 billion in FY19P. Freight revenue rose at a CAGR of 4.30 per cent during FY08-FY19 to reach US$ 18.20 billion in FY19.

Revenue growth has been strong over the years. Indian Railways’ gross revenue stood at Rs 183,092.74 crore (US$ 26.20 billion) in FY20 (till February 2020). Freight earnings in FY20 (till February 2020) stood at Rs 119,216.11 crore (US$ 17.06 billion). Passenger earnings for Indian Railways was estimated at 51,077.73 crore (US$ 7.31 billion) in FY20 (till February 2020). Freight remains the major revenue earning segment for Railways, accounting for 65.1 per cent of its total revenue in FY20 (till February 2020), followed by the passenger segment.

Passenger traffic was valued at 7.67 billion and freight traffic at 1,105.33 million tonnes in FY20 (till February 2020).

India was among the top 20 exporters of railways globally as of 2017. India’s export of railways has grown at a CAGR of 31.51 per cent during 2010-2018 to US$ 507.90 million. Exports of railways in 2019E stood at US$ 635 million.

Investments/ Developments

Foreign Direct Investment (FDI) inflow in Railways Related Components stood at US$ 1,107.60 million from April 2000 to March 2020.

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

  • In November 2019, pilot project was launched to study the feasibility of using Railways’ parcel service for e-tail players.
  • In November 2019, Indian Railways entered into Procurement cum Maintenance Agreement with Madhepura Electric Locomotive Pvt. Ltd. (MELPL), a joint venture of Indian Railways and France-based Alstom to manufacture 800 electric locomotives for freight service and its associated maintenance.
  • In October 2019, Indian Railway launched One Touch ATVM for fast ticketing at 42 Suburban Stations of Central Railway.
  • Khurja –Bhadan section of eastern corridor in Uttar Pradesh to be formally opened for traffic on October 2, 2019.
  • In July 2019, longest electrified tunnel built between Cherlopalli and Rapuru stations.

Government initiatives

Few recent initiatives taken up by the Government are:

  • As on June 02, 2020, a total of 4,155 Shramik Special trains were operationalised from various states across the country and more than 57 lakh passengers have already reached their home state.
  • As per Union Budget 2020-21, Ministry of Railways have been allocated Rs 72,216 crore (US$ 10.33 billion).
  • In February 2019, Indian Railways decided to launch food packets with QR codes and give live kitchen feed.
  • The speed is been raised to 160 kmph on Delhi-Mumbai and Delhi-Howrah routes by 2022-23. The passenger trains have got approval to raise 60 per cent increase in average speed.
  • Dedicated Freight Corridor Corp. of India Ltd (DFCCIL) is already building the first two freight corridors - Eastern Freight Corridor from Ludhiana to Dankuni (1,856 kms) and Western Freight Corridor from Dadri to Jawaharlal Nehru Port (1,504 kms) - at a total cost of Rs 81,000 crore (US$ 11.59 billion).
  • The Government is going to come up with a ‘National Rail Plan’ to 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 Research Designs & Standards Organisation (RDSO), the research arm of Indian Railways, to have digital and transparent systems and procedures.

 

Road Ahead

Indian Railway network is growing at a healthy rate. In the next five years, 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.

Indian Railways is targeting to increase its freight traffic to 3.3 billion tonnes by 2030 from 1.1 billion tonnes in 2017.

It is projected that freight traffic via the Dedicated Freight Corridors will increase at a CAGR of 5.4 per cent to 182 MT in 2021–22 from 140 MT in 2016–17.

Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123

References: Press Releases, Department of Industrial Policy and Promotion, Press information Bureau, Media Reports, Railways Budget 2019-20, Indian Railways

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

Indian Railways

Earnings from freight (in US$ billion
Freight Traffic Projections on Dedicated Freight Corridor (in MMT)

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