Getting Future Ready: Trends and opportunities in the railway sector

With the goal of becoming future-rea­dy, the railway sector has witne­s­s­ed incremental growth in the past few years. The introduction of new trains has also led to an increase in passenger numbers. The sector is set to expand significantly due to inc­re­ased budgetary allocation, the government’s focus on infrastructure development, and big-ticket projects such as high speed rail and dedicated freight corridors.

IR’s improving performance

With a robust growth of 15 per cent in 2021-22, Indian Railway’s (IR) freight traffic crossed the 1,400 mt mark, registering the highest ever freight loading during a year. Of the freight loading target of 1,475 mt for 2022-23, around 1,243 mt had already been achieved during the April-January period of 2022-23. During this period, IR ear­ned a freight revenue of Rs 1,354 billion, 16 per cent higher than that in the corresponding period of 2021-22.

Passenger traffic in 2021-22 increas­ed by 175 per cent to reach 3.54 billion. During the April-January period of 2022-23, passenger traffic stood at 5,177 million, marking an increase of 101 per cent over the corresponding period in the previous year. The unreserved passenger segment accounted for a significant portion of this traffic, which recorded a 128 per cent inc­re­ase during the same period. On the revenue si­de, IR’s total passenger earnings during April-January period of 2022-23 reached Rs 547.33 billion an originating basis, an increase of 73 per cent over the same period in 2021-22.

For some time now, there has been a push to accelerate cargo traffic growth. As a result, the government launched the Gati Shakti Multi-Modal Cargo Terminal (GCT) policy in Decem­b­er 2021 to encourage private players to create additional facilities for handling rail freight. GCTs are being developed on non-railway land as well as fully/partially on railway land, based on industry demand and the pot­ential for cargo traffic. As of December 2022, 22 GCTs have al­ready been commissioned. Meanwhile, 125 ap­­plications for the development of cargo terminals under the GCT policy have been received and 79 in-principle app­rovals have be­en granted. In another important development, IR and India Post launched the Rail Post Gati Sh­akti Express Cargo Service, a joint parcel product on February 16, 2023. It is an initiative that ai­ms to provide seamless logistics for the services sector in the country. The initiative has been undertaken in accordance with the budget announcements for the year 2022-23.

Quantum increase in budgetary allocation

In the Union Budget 2023-24, the Ministry of Railways received an allocation of Rs 2.41 trillion. The allocation is 48.64 per cent higher than the revised estimate of Rs 1.62 trillion for 2022-23 and 71.88 per cent higher than the budget estimate of Rs 1.4 trillion. The capital outlay for the railways is at an all-time high, aimed at strengthening the order book for railway contractors and wagon manufacturers. It is nine times higher than the budget allocations in 2013-14.

Of the total allocation in 2023-24, Rs 375.81 billion has been allocated to rolling sto­ck and Rs 41.98 billion to signalling and tele­communication. On the infrastructure expansion front, Rs 318.5 billion has been allocatted to new lines, Rs 46 billion to gauge conversion, Rs 307.49 billion to doubling works, Rs 172.96 billion to track renewals, and Rs 12.55 billion to bridges, tunnel works and approaches. Mo­re­over, the government has proposed the ma­nu­factu­ring of 35 hydrogen fuel-based trains, 4,500 ne­wly designed automobile carrier coaches with side entry, 5,000 Linke Hofmann Busch (LHB) coaches and 58,000 wagons. Reportedly, this year, there will be an increase in the number of Vande Bharat trains, new tra­cks will be laid, and the Ahmedabad-Mumbai bullet train project will be completed.

Meanwhile, in the Rail Budget 2023-24, Ut­tar Pradesh was allocated Rs 175.07 bi­llion, followed by Madhya Pradesh at Rs 136.07 billion. State-wise, there was a 26-fold increase in the maximum budget received by Delhi, followed by Punjab, the allocation for which was 21 times higher than in the Rail Budget 2013-14.

Station redevelopment taking centre stage

In a bid to improve infrastructure and enhance the passenger experience, IR has undertaken ma­ny projects for redevelopment and upgradation of railway stations. Under the Station Rede­velopment Programme, IR intends to redevelop a total of 400 stations. As of December 2022, redevelopment work on 48 stations is in prog­ress. Apart from this, 1,275 small stations have been identified for redevelopment under the newly launched Amrit Bharat Station Scheme. Along with construction, station redevelopment opens up prospects for facility management and commercial monetisation.

Semi-high-speed technology with Vande Bharat

With the aim of launching 400 Vande Bharat trains by 2025, IR is venturing into a new era of semi-high-speed mobility. As of February 2023, a total of 10 Vande Bharat trains have been launched in the country. Formerly known as Train 18, these trains can operate at a speed of 160-180 km per hour. Designs for Vande Bharat 3.0, which can operate at 220 km per hour, have also been finalised. All coaches of the train are equipped with new-age features such as automatic doors, audio-visual passenger information systems and 32 inch infotainment screens.

Focus on safety and sustainability

Electronic interlocking is also being adopted on a large scale to derive the benefits of digital technologies in train operations and enhance safety. In 2022-23, electronic interlocking systems were installed at 347 stations. As of December 31, 2022, a total of 2,888 stations have been deployed with electronic interlocking. IR is also moving towards better technological deployment  to improve operational performance. To that end, it has been rolling out automatic block si­g­nalling (ABS) in mission mode. As of Decem­ber 31, 2022, ABS has been provided for 3,706 rkm over IR. The national transporter is also dep­loying “Kavach” on its network with the aim of improving operational safety.

IR also intends to become a net zero carbon emitter by 2030. To this end, it has taken several initiatives including 100 per cent electrification, installation of bio-toilets, setting up of renewable energy power plants and waste-to-energy plants, green stations, construction of dedicated freight corridors, etc.

Prospects for private participation

IR intends to facilitate public-private participation (PPP) in a manner that ensures that government control over public safety and security is not compromised. The government is looking to take the PPP route for freight corridors, station redevelopment, and development of GCTs. Previous PPP initiatives have not been very successful except in port connectivity projects and, to a limited extent, in container trains. Earlier, bids for the privatisation of 150 trains had been invited. However, due to the lack of private participation this project was not taken forward.


The railway sector has seen significant government support in the recent past. The National Rail Plan (NRP) is a roadmap for the creation of  single future-ready railway system in India by 2030 and the development of capacity ahead of demand to cater to the future growth till 2050. It also aims to increase the share of railways in freight operations to 45 per cent. A subcomponent of the NRP, Vision 2024 aims to accelerate the implementation of critical projects, achieve 100 per cent electrification, upgrade the train speeds on key routes, and eliminate all level crossings on select routes by 2024.

In order to provide an impetus to the freight segment, Mission 3000 MT was launched, whereby IR intends to double its cargo loading capacity to 3,000 mt by 2027 as against 1,416 mt in 2021-22. In October 2022, the government announced its plans of rolling out projects worth Rs 900 billion during 2023 to achie­ve the 2027 target.

According to the Economic Survey 2022-23, a substantial increase in fund allocation over the years has increased the pace of infra­str­ucture development. Apart from this, the government is taking various steps including de­le­gation of power at the field level, close monitoring of the progress of projects at various levels, regular follow-ups with the state go­vernments and relevant authorities for expeditious land acquisition, forest and wildlife clearances and resolution of other issues pertaining to projects. These measures have also accelerated development works in the sector.

Net, net, with a strong project pipeline and support from the government, the sector presents a positive outlook and is poised to provide significant opportunities to contractors, developers, equipment suppliers and technology solution providers