September 2020

The pandemic and lockdown have dealt a body blow to urban transport systems. India’s metros were shut down from late March to early September this year, leading to huge revenue losses. Even now, safety and physical distancing considerations have meant low ridership and large-scale changes to systems to create contactless use. In addition, ongoing projects have suffered delays as supply chains broke down and labour was in short supply and difficult to deploy.

The rest of the fiscal will also be difficult since ridership remains low. Cash-strapped metro systems may be forced to look for more by way of financial support. Ridership is not expected to recover until the middle of calendar year 2021 at the least.

However, long-term opportunities in urban transport still remain. Multilaterals are likely to continue providing financing and there are a huge number of ongoing projects. The thrust towards self-reliance and Make in India should create more opportunities for the private sector. In addition, the pandemic itself has meant new technological challenges which could create more opportunities.

Private participation in metro projects has been less than stellar to date with projects like the Gurgaon Rapid Transit and Delhi Airport Express Line proving to be failures. However L&T may be successful in learning from these experiences and is trying out a different model for the Hyderabad metro. The so-called Hyderabad Next model envisages around 50 per cent of revenue from non-fare sources.

The cost of new projects in Tier I and Tier II cities may reduce with fewer tunnels and more elevated alignments in Metrolite projects. There is also an emphasis on reduction of energy intensity and deployment of alternative, renewable energy for these projects.

There is a new focus on non-fare revenue streams. Train wrapping, food courts, real estate development, etc., are all areas that need to be exploited further. Apart from the prospects in manufacturing and in technology induction across the IT domain as well as in safety, signalling and train control systems, there are massive construction opportunities as well. Operations and maintenance could be another area where private players could profitably seek opportunity. Feeder services to and from stations is also a potential growth area.

The Metro Rail Policy, 2017, envisaged an important role for private players, but private companies are still reluctant to invest in the sector. However, this could change as learnings from early negative experiences are incorporated in new business models.


Enter your email address