Indian Railways Industry

Introduction

The Indian Railways is among the world’s largest rail networks. The Indian Railways route length network is spread over 1,23,236 km, with 13,452 passenger trains and 9,141 freight trains 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 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 2018-19P. Freight revenue rose at a CAGR of 4.30 per cent during FY08-FY19 to reach US$ 18.20 billion in 2018-19.

The gross revenue stood at Rs 85,835.05 crore (US$ 12.28 billion) in FY20P (up to September 2019). Passenger earnings of Indian Railways is estimated at Rs 26,642.73 crore (US$ 3.81 billion) in FY20 (up to September 2019). Freight earnings in FY20 (up to September 2019) stood at Rs 54,232.05 crore (US$ 7.76 billion).

India was among the top 20 exporters of railways globally, as of 2017. India’s exports of railways have 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) inflows into Railways Related Components from April 2000 to June 2019 stood at US$ 977.24 million.

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.
• From April-August 2019, a total of 24,493 bio-toilets were installed in trains.
• In May 2018, IRCTC introduced Alternate Train Accommodation Scheme (ATAS) which aims to provide confirmed berths in alternate trains to waitlisted passengers.
• In December 2018, France-based Alstom announced plans to augment its coach production capacity at its facility in Sri City from 20 cars per month to 24 cars per month. Also, it will set up a new production line to increase capacity to 44 cars per month by the end of 2019.
• In December 2018, the Prime Minister of India laid the foundation stone for the third phase of the Pune metro.

Government initiatives

Few recent initiatives taken up by the Government are:

• 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.
• Under the Union Budget 2019-20, the Government of India allocated Ministry of Railways Rs 1,60,176 crore (US$ 22.91 billion).
• Dedicated Freight Corridor Corp. of India Ltd (DFCCIL), is already building the first two freight corridors—Eastern Freight Corridor from Ludhiana to Dankuni (1,856km) and Western Freight Corridor from Dadri to Jawaharlal Nehru Port (1,504km)—at a total cost of Rs 81,000 crore (US$ 11.59 billion).
• As of December 2018, the Government of India is considering a High Speed Rail Corridor project between Mumbai and Nagpur
• As of November 2018, Indian Railways is planning to come out with a new export policy for railways.
• 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.
• 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.

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.

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 as on September 2019, Re 1 = US$ 0.014019

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.