Action Stations: New initiatives to create world-class infrastructure

New initiatives to create world-class infrastructure

Railways have been operational in India since 1853, and most of the stations are equipped with facilities which are over 100 years old. To upgrade and modernise station infrastructure, Indian Railways (IR) is undertaking large-scale station modernisation projects with the long-term objective of providing world-class amenities to its customers. IR has plans of maximising revenue generation by monetising all the land parcels it owns in prime areas of the country, and utilise the revenue to create better station infrastructure as well as enhance the customer experience at railway stations.

In a bid to develop better station infrastructure, IR has undertaken various programmes and schemes in the past such as the Adarsh Station Scheme, the Model Station Scheme, the Modern Station Programme and the World-Class Station Programme. Following these programmes, in 2015, IR launched the Station Redevelopment Programme with the aim of augmenting station facilities for a better customer experience. The programme aims to develop world-class railway stations in key large cities where adequate land is available.

At present, IR has about 8,495 railway stations. Of these, 75 are major stations with annual earnings of more than Rs 600 million (A-1 category stations) and 332 stations are A category stations, with annual earnings between Rs 80 million and Rs 600 million.

IR has identified around 600 stations across the country for redevelopment. These stations have a footfall of approximately 25 million passengers per day and 2,700 acres of prime real estate land and encroachment-free land. The annual growth in footfalls at these stations is around 7 per cent. The total investment requirement for developing these 600 stations (including commercial establishments in the surrounding areas) is Rs 760 billion for commercial development and Rs 340 billion for station development.

Indian Railway Stations Development Corporation Limited (IRSDC), a joint venture between the Rail Land Development Authority (a statutory authority under the Ministry of Railways [MoR]) and Ircon International Limited (a Government of India undertaking under the MoR), has been entrusted with the redevelopment of 15 stations. Recently, IRSDC was authorised to approve station redevelopment plans that do not require any change in land use. It has also been empowered to raise loans without creating any liability for the MoR. Further, the lease period has been extended from 45 years to up to 99 years (to be taken up on a case-to-case basis). At present, 12 station redevelopment projects are at different stages of development. The Habibganj station in Bhopal is the first redevelopment project to be awarded on a public-private partnership (PPP) basis. After initial apprehensions, the Habibganj station was awarded to the Bhansal Group on March 1, 2017. The station will become the country’s first privately managed station. Construction work is currently under way and is expected to be completed by December 2018.

Meanwhile, the Gandhinagar station redevelopment project will be executed by Gandhinagar Railway and Urban Development Corporation Limited, a special purpose vehicle jointly owned by the Gujarat government and IRSDC with an equity stake of 74 per cent and 26 per cent respectively. The letter of award for the project was issued on January 3, 2017 and construction work is scheduled to be completed by December 2018.

The redevelopment of the Surat railway station is a first-of-its-kind attempt in the country, bringing together three levels of government – central, state and municipal. An SPV, Surat Integrated Transport Corporation Limited, has been set up for the development of the project. Further, tenders for the redevelopment of Anand Vihar, Bijwasan, Chandigarh, Charbagh and Gomti Nagar stations are scheduled to be opened by end-October 2018. Meanwhile, the station redevelopment projects at Nagpur, Gwalior, Baiyyappanahalli, Safdarjung, Tirupati and Puducherry are in preliminary stages of development. Going forward, IRSDC intends to take up the redevelopment of another 20 stations by February 2019.

The way forward

Overall, the station redevelopment programme offers immense opportunities for commercial development around stations. These include the development of real estate such as hotels, eateries, multiplexes, shopping malls and office complexes and multimodal transit hubs. Apart from this, the linkage of the programme with the Smart Cities Mission, involving the convergence of modernisation plans of cities with railway stations, will provide additional opportunities in the long term. These projects are expected to offer tremendous opportunities for all stakeholders – project developers/contractors, equipment manufacturers, and technology and construction material suppliers.

Based on a presentation by S.K. Lohia, Managing Director and Chief Executive Officer, IRSDC, at a recent India Infrastructure conference