Indian Railways is among the world’s largest rail network, and its route length network is spread over 67,956 kms, with 13,169 passenger trains and 8,479 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.
Revenue growth has been strong over the years. Indian Railways’ gross revenue stood at Rs 174,660.52 crore (US$ 24.78 billion) in FY20. Freight earnings in FY20 stood at Rs 113,487.89 crore (US$ 16.24 billion). Passenger earnings for Indian Railways was at 50,669.09 crore (US$ 7.25 billion) in FY20. The total passenger revenue between April 2020 and February 2021 stood at Rs. 12,409.49 crore (US$ 1.70 billion) as against Rs. 48,809.40 crore (US$ 6.7 billion) for the corresponding period in the previous year.
Freight remains the major revenue earning segment for Railways, accounting for 65% of its total revenue in FY20, followed by the passenger segment. In FY20-21, Indian Railways recorded the highest loading in freight transportation. Freight traffic carried by Indian Railways stood at 1,232.64 million tonnes in FY21. With this, the freight revenue of Indian Railways also increased to Rs. 1,17,386 crore (approx.) (US$ 16.04 billion) for the year 2020-21, as against Rs. 1,13,488 crore (US$ 16.10 billion) during fiscal 2019-20.
Since August 2020, the Indian Railways has run 450 Kisan Rail services and was able to transport over 1.45 lakh tonnes of agricultural produce & perishables
RailTel, a PSU under the Railway Ministry, which provides fast and free Wi-Fi across the Indian Railways network, announced its highest ever consolidated income of Rs. 11,660.05 million (US$ 158.48 million) for FY19-20. This income figure is a growth of 12.3% over the consolidated income of the financial year FY18-19.
In June 2021, freight earnings stood at US$ 1.50 billion, which is 26.0% higher than last year’s earnings of US$ 1.19 billion, and freight loading reached 112.65 million tonnes, which is 11.19% higher than last year’s loading of 101.31 million tonnes.
In November 2020, India Railways announced that 40% of dedicated freight corridor (DFC) will be opened for traffic by end-FY21, while the entire 2,800 km route will be completed by June 2022.
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% during 2010-2018 to US$ 507.90 million. Exports of railways in 2019E stood at US$ 635 million.
Foreign Direct Investment (FDI) Inflow in railway-related components stood at US$ 1.23 billion from April 2000 to March 2021.
Following are some of the major investments and developments in India’s railways sector:
- The Indian Railways is likely to deliver 58 super critical as well as 68 critical projects worth more than Rs.1,15,000 crore (US$ 15.44 billion) in the next few years. 27 super critical projects will be completed by December 2021, while two projects will be handed over by March 2022. 29 super critical projects—spanning 1,044 kms and costing Rs. 11,588 crore (US$ 1.5 billion)—have been commissioned. Four projects worth Rs. 1,408 crore (US$ 189.05 million) have been completed and the remaining projects are targeted for completion by March 2024.
- In July 2021, the Ministry of Railways received bids from the private and public sectors to operate 29 pairs of trains with about 40 modern rakes, entailing an investment of ~Rs. 7,200 crore (US$ 966.74 million).
- On July 25, 2021, the Indian Railways Station Development Corporation (IRSDC), a nodal agency of the Ministry of Railways spearheading the re-development of railway stations across the country, claimed that the two railway stations will be redeveloped at an indicative cost of Rs. 1,285 crore (US$ 172.54 million) in four years.
- The Indian Railways has decided to undertake electrification of Broad Gauge (BG) rail lines in a mission mode and is likely to complete the process by 2023-24. Of the 64,689 kms of broad gauge route, 45,881 kms has been electrified and the remaining 18,808 kms route is yet to be electrified. About Rs. 21,000 crore (US$ 2.8 billion) is estimated to be spent on electrification of the remaining BG routes.
- As of May 2021, the Indian Railways loading stood at 73.45 million tonnes (MT) including 35.62 MT (coal), 9.77 MT (iron ore), 3.38 MT (food grains), 2.22 MT (fertilisers) and 3.15 MT (cement, excluding clinker).
- As of May 5, 2021, Indian Railways commissioned Wi-Fi at 6,000 railway stations.
- In May 2021, the Government of India and European Investment Bank (EIB) signed a finance contract for the second tranche of US$ 182.30 million for the Pune Metro Rail project.
- In January 2021, Prime Minister Mr. Narendra Modi flagged off the world’s first double-stack, long-haul container train from New Ateli in Haryana to New Kishanganj in Rajasthan.
- In January 2021, Hyundai Motor India Ltd. (HMIL) has announced that it has exported 125 cars to Nepal via the Indian Railways. The export is claimed to be eco-friendly and the first-ever by the company. With this step, the company is aiming to reduce carbon footprint by 20,260 tonnes.
- In December 2020, a Northeast Frontier Railway (NFR) spokesperson stated that at least six construction projects, including three new lines and three double-line projects, will be completed in 2021. Among these three new rail line projects, two will be international lines, connecting to neighbouring countries-Bangladesh and Nepal.
- On November 26, 2020, National High-Speed Rail Corporation Limited (NHSRCL) signed an agreement with L&T to design and construct 47% alignment works for Mumbai-Ahmedabad bullet train project.
- The Indian Railways completed eight major capacity enhancement projects by taking advantage of the coronavirus lockdown. These projects included three super critical projects with a combined length of 68km, three critical projects with a combined length of 45km, upgradation of the entire 389km railway line from Jhajha in Bihar to Pandit Deen Dayal Upadhyaya Junction in Uttar Pradesh and a new 82km port connectivity line to Paradip.
- In September 2020, the Indian Railways announced the ‘Clone Train Scheme’, wherein it planned to run a clone train with the train of the same number, to help and provide relief to the waitlisted passengers over heavy passenger traffic routes.
- As a part of the Railways’ plans to upgrade its network, the Ministry announced that all non-AC sleeper coaches will be replaced by AC coaches for trains running >130 kmph. This move has been taken as a technical necessity for high-speed trains with the bonus of improving passenger experience.
Few recent initiatives taken up by the Government are:
- In June 2021, the Central Government approved the implementation of a 235 km semi high-speed rail corridor between Pune and Nashik in Maharashtra. The cost of building this project will be Rs. 16,039 crore (US$ 2.20 billion).
- In June 2021, the Central Government approved a Rs. 25,000 crore (US$ 3.43 billion) five-year plan to use 4G technology to modernise communication networks in railway stations and improve the safety and security of train journeys.
- Indian Railways has logged the highest ever electrification of sections covering 6,015 Route Kilometer (RKM) in a single year during 2020-21. More than 5 times electrification was achieved during (2014-21) last seven years as compared to during 2007-14.
- In April 2021, Indian Railways completed the arch closure of the under-construction Chenab Bridge which is the world’s highest railway bridge. Chenab Bridge is 1315 m long and will be 35 meters higher than Eiffel Tower in Paris. The total cost of the bridge is estimated to be Rs. 1,486 crore (US$ 200.46 million) and the design life of the bridge is said to be 120 years.
- In FY21-22, the Indian Railways announced to complete several projects. The Railway Ministry has identified 56 projects in various railway zones that will be completed in February-March 2021.
- Under the Union Budget 2021-22, the government allocated Rs. 110,054.64 crore (US$ 15.19 billion) to the Ministry of Railways.
- In February 2021, Minister of Railways Mr. Piyush Goyal dedicated 88 Railway projects to the country worth Rs. 1000 crore (US$ 138.14 million) in the states of Kerala, Tamil Nadu, Madhya Pradesh, West Bengal and Karnataka.
- In February 2021, Indian Railways called for ‘Request for Qualification (RFQ)’ for redeveloping New Delhi railway station under a public-private partnership, with an estimated project cost of Rs. 5,000 crore (US$ 690.75 million).
- To boost rail infrastructure and make the Indian Railways network future ready, Indian Railways has identified 56 projects across the country in various zones to be completed by Feb-Mar 2021 and FY22.
- In July 2020, the Ministry of Railways has invited Request for Qualifications (RFQ) for private participation in operating passenger train services across 109 Origin Destination (OD) routes. As part of the plan, the railways will introduce 12 trains in FY23, 45 in FY24, 50 in FY26 and 44 more in the next fiscal, taking the total number of trains to 151 by the FY27. The project would entail private sector investments of about Rs. 30,000 crore (US$ 4.09 billion).
- In November 2020, Indian Railways developed anti-COVID-19 coach to prevent the spread of coronavirus. This anti-COVID-19 coach has hands-free water tanks and flushes; copper-coated handles and locks.
- The Railway Minister, Mr. Piyush Goyal, announced on November 29, 2020, that tea will be sold in environment friendly 'Kulhads' (earthen cups) in place of plastic cups at all railway stations in the country. Currently, >400 railways stations serve tea in ‘Kulhads’. This strategy will be the contribution of the Indian Railways towards a plastic-free India.
- As of October 2020, the Railway Ministry issued a policy to develop goods shed facilities at small/roadside railway stations aimed at augmenting terminal capacity through the participation of the private sector. Private parties are allowed to develop a goods wharf, utilities for labourers (resting space, drinking water, etc.), approach roads, loading and unloading docks, and other related infrastructure.
- On September 22, 2020, Indian Railways sanctioned a feasibility study for seven bullet train projects - all open to PPP investments.
- In July 2020, The Ministry of Railways decided to create a special cell, Project Development Cell (PDC), in the railway board to increase investments and inflow of foreign direct investment (FDI).
- 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.
- The Ministry of Railways plans to monetise assets including Eastern and Western Dedicated Freight Corridors after commissioning, induction of 150 modern rakes through PPP, station redevelopment through PPP, railway land parcels, multifunctional complexes (MFC), railway colonies, hill railways and stadiums.
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% 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.
The government has announced two key initiatives for seeking private investments-running passenger trains by private operators across the railways network and redevelopment of railway stations across the country. According to Indian Railways, these projects have the potential of bringing an investment of over US$ 7.5 billion in the next five years.
‘Adarsh’ Station Scheme has been started since 2009-10 and presently, railway stations are upgraded/modernised based on identified need of providing better enhanced passenger amenities at stations. Under the scheme, 1253 stations have been identified for development, out of which 1201 stations so far have been developed. The remaining 52 stations are planned to be developed by 2021- 22.
Indian Railways is also looking at other areas of revenue generation such as the following: a) Change in composition of coaches so that it can push the more profitable AC coach travel; b) Additional revenue streams by monetising traffic on its digital booking IRCTC; and c) Disinvesting IRCTC.
The Indian Railway launched the National Rail Plan, Vision 2024, to accelerate implementation of critical projects, such as multitrack congested routes, achieve 100% electrification, upgrade the speed to 160 kmph on Delhi-Howrah and Delhi-Mumbai routes, upgrade the speed to 130 kmph on all other golden quadrilateral-golden diagonal (GQ/GD) routes and eliminate all level crossings on the GQ/GD route, by 2024.
Note: Conversion rate used in April 2021, Rs. 1 = US$ 0.013
References: Press Releases, Department of Industrial Policy and Promotion, Press information Bureau, Media Reports, Railways Budget 2021-22, Indian Railways
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.