Indian Railways Industry

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 5.48 per cent during FY07-FY19 to US$ 27.13 billion in FY19. Earnings from the passenger business grew at a CAGR of 5.58 per cent during FY07-FY19 to reach US$ 7.30 billion in 2018-19P. Freight revenue rose at a CAGR of 5.84 per cent during FY07-FY19 to reach US$ 18.20 billion in 2018-19.

India was among the top 20 exporters of railways globally, as of 2017. India’s exports of railways have grown at a CAGR of 27.05 per cent during 2010-2017 to US$ 303.29 million. Exports of railways in 2018 (up to July 2018) stood at US$ 278.05 million.

Investments/ Developments

Foreign Direct Investment (FDI) inflows into Railways Related Components from April 2000 to March 2019 stood at US$ 969.28 million.

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

• 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:

• 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.

Exchange Rate Used: INR 1 = US$ 0.0159 as on March 31, 2019.

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.