Novemver 2019

The experience across the UMT sector in India can at best be described as patchy. There has
been rapid uptake of metro rail systems. Metros will be operational across 25 cities within the
next few years. But many operational projects are loss-making and there has been very low private
sector participation in metro projects. BRT systems, on the other hand, have seen private participation.
But the experience has been disappointing, with BRT systems failing to meet expectations
and private investors suffering as a result.

The UMT sector therefore continues to rely heavily on multilateral support and government funding
for its investment needs. Policymaking has been somewhat fractured, partly due to the fact that
there are always multiple agencies with different agendas involved in urban projects. There have also
been the usual issues with land acquisition and right of way.

However, there is a massive investment opportunity, both present and future. UMT systems must
expand in order to cope with increasing urbanisation, thereby creating multiple opportunities. Rolling
stock demand, for instance, is growing at better than 20 per cent per annum. Metros are also figuring
out ways to generate non-fare revenues – these exceed fare revenues for several projects. There are likely
to be more plays here as metros find innovative ways to generate revenues and municipal corporations
allow higher floor space index for real estate development along metro routes, for instance.

Some cities are also experimenting with other transport solutions such as monorail and light rail
systems, as well as unique options such as Kochi’s water metro connectivity project and Kolkata’s
heritage trams. There is an increasing trend of inducting intelligent transport systems, complete with
sophisticated signalling and train control systems. Fare solutions are getting smarter as well with
open loop, contactless cards, QR codes on mobile, etc. All these are areas where private entrepreneurs
could profitably create niches for themselves.

On the policy side, there is a need to learn from the failure of various BRT projects such as the
Delhi and Pune BRT systems. These systems have worked well in many places around the world, and
it is a very cost-effective MRT system. Understanding why it has not worked so well in India would be
key to “rebooting” BRT, and making it more viable. There is also a need to review the Metro Rail Policy,
2017, given the ground reality of reluctance to participate on the part of private players.

Over the past decade, India has experienced one of the greatest surges of urbanisation in history,
and this process continues. This mass migration to cities has created huge challenges, and also
huge opportunities for the UMT sector. The next five years could be make or break for the sector.


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