India’s urban rail sector has experienced robust growth in recent years. With cities becoming more congested than ever before and the need for sustainable transport increasing, urban rail has emerged as a cornerstone of urban development. These projects have primarily been funded by the central and state governments due to their capital-intensive nature, while multilateral and bilateral agencies have also played a crucial role in financing them. As metro networks continue to expand across cities, ensuring their long-term financial sustainability is now as important as arranging capital for upcoming projects.
Once the metro systems become operational, generating adequate revenue is essential for them to remain self-sustaining. The challenge, however, is that fare box revenue (FBR) alone is insufficient to cover costs incurred on operations, maintenance, debt servicing and future expansion. Increasing public transport fares to improve income is not a favourable option, as it risks reducing ridership. Therefore, identifying new revenue streams is essential. Innovative strategies aimed at enhancing non-fare box revenue (NFBR), coupled with transit-oriented development (TOD) and value capture finance (VCF), offer a viable route to financial sustainability and reduced reliance on public funds. Metro authorities across states are now exploring new revenue streams to generate additional income beyond fares, such as commercial space leasing, advertising, naming rights, and property development, along with TOD policies introduced in multiple states.
Unlocking the potential of non-fare revenue in metro operations
Metro networks across the country are increasingly looking to tap into non-fare revenue (NFR) sources amid mounting financial pressures. Even the country’s largest and most established system, the Delhi Metro Rail Corporation (DMRC), continues to incur losses. The DMRC reported a pre-tax loss of Rs 17.82 billion in 2023-24, which is expected to be around Rs 16 billion in 2024-25, as per unaudited financial statements. Moreover, the DMRC’s consolidated loss stood at Rs 51.04 billion in 2023-24. Against this backdrop, the importance of developing alternative revenue streams cannot be overstated.
The DMRC has been a pioneer in establishing a NFBR system. As per the most recent financial report in the public domain, it realised Rs 5.74 billion through rental earnings during 2023-24. Further, lease income stood at Rs 1.53 billion, while consultancy services generated around Rs 440 million. Meanwhile, newer metro systems are also catching up. A key milestone was achieved by Mumbai Metro during 2024-25, as NFBR grew threefold to Rs 1.22 billion compared to Rs 42.5 million during 2023-24. This significant increase was driven by licensing of optical fibre cables for Rs 617.2 million, advertisements at stations for Rs 239.5 million, retail shops and kiosks for Rs 82.2 million, naming rights and branding of stations for Rs 97.6 million, advertisements on trains for Rs 74.7 million, and other sources such as telecom infrastructure and promotional activities. Over the years, several alternative sources of revenue, including commercial space leasing, kiosks, advertisements at stations and inside metro coaches, parking charges, leasing of telecom infrastructure, and station naming rights, have gradually matured.
Some of the recent efforts undertaken by metro authorities to generate revenue through these avenues include a request for proposal (RFP) by Mumbai Metro to offer 68,166 sq. ft. of commercial space across 30 stations on Metro Lines 2A and 7 in September 2025. This offering comprises 472 kiosks and 25 block spaces, with lease terms ranging from five to fifteen years. Earlier, in June 2025, in a move to improve non-fare earnings, Bangalore Metro Rail Corporation Limited (BMRCL) rolled out advertisement-wrapped trains for the first time on the purple and green lines of Namma Metro. For this initiative, BMRCL entered into two separate seven-year agreements with advertising firms, valued at Rs 12.6 million and Rs 8.15 million, respectively. Similarly, in August 2025, Kolkata Metro unveiled the new look of its metro smart card after entering into an agreement with a private company for the branding of the card. As part of the agreement, 0.3 million new smart cards will be sold to commuters.
Furthermore, metros are now utilising surplus land, beyond commercial leases. In May 2025, Kochi Metro Rail Limited (KMRL) launched a state-of-the-art fuel station in partnership with Bharat Petroleum Corporation Limited (BPCL), adjacent to the Kalamassery metro station. The facility, spread over 26,900 sq. ft., operates on a direct-dealership model. It will include electric vehicle (EV) charging infrastructure and a compressed natural gas (CNG) fuelling facility. Additionally, as a sustainable mode of transportation, metro systems are generating income through green initiatives. As of March 2024, the DMRC balance sheet holds 4.55 million carbon emission reduction (CER) units valued at Rs 8.33 million. Further, as of June 2025, Mumbai metro lines 2A and 7 were certified as carbon neutral corridors earning 85,849 carbon offset units (CoUs).
Over the years, metro systems have developed collaborative models to increase revenue. Maha-Metro, in partnership with SBI, launched MAHA CARD for Nagpur Metro, buses, feeders, parking, etc. Maha-Metro now receives a 25 per cent share of the transaction costs from non-transit uses of the card. Similarly, Kochi Metro has partnered with Axis Bank to launch Kochi1 card, which will yield 0.2 per cent of the gross revenue from the utilisation of this card outside KMRL’s ecosystem, including various outlets and internet transactions, for KMRL.
Progress and potential of transit-oriented development
In recent years, TOD has gained significant traction as an urban planning tool. It is a planning framework that integrates land use and transportation planning to develop planned and sustainable urban growth centres. It features high density and mixed land use, incorporating residential, commercial, and industrial developments. A key component of the TOD policy is the use of the land value capture (LVC) mechanism, which enables the government to recover part of the value generated by infrastructure investments. In 2017, the Ministry of Housing and Urban Affairs (MoHUA) issued the National Transit Oriented Development Policy, encouraging states to integrate land use and transport planning to develop compact growth centres within a 500-800 metre influence zone on either side of transit stations.
While NFR helps diversify the financial base of metro systems, TOD presents an opportunity to generate long-term economic and social returns. By developing high-density and mixed-use areas within walking distance of stations, metros can not only increase ridership but also generate revenue through the appreciation of land and property values along their corridors. Complementing this, the Value Capture Finance Policy Framework released by the MoHUA outlines instruments such as land value tax, premium on additional floor area ratio (FAR), betterment levy, transfer of development rights, and impact fees, among others to capture part of the incremental value created by public investments. Over the years, almost all local government authorities have launched their TOD policies, including those in Maharashtra, Delhi, Nagpur, and Pune, among others.
Recently, the Urban Development Department of Jaipur unveiled a draft TOD policy in September 2025. As of October 2025, the National Capital Region Transport Corporation (NCRTC) and the Ghaziabad Development Authority (GDA) are preparing to implement a TOD policy along the 45 km Delhi–Ghaziabad–Meerut rapid rail corridor to enhance revenue generation. The policy defines TOD zones as areas within a 1.5 km radius of the corridor. Under the policy, the FAR in these influence zones will be increased by 33-50 per cent. Authorities expect that higher FAR utilisation and mixed land use will lead to a 200 per cent increase in revenue from the designated zones. Additionally, Delhi’s first TOD project at Karkardooma is set to reach a significant milestone after long delays, with the completion of a residential project in Phase I of the plan.
The way forward
Both, TOD and VCF hold significant potential to become key revenue sources for the country’s metro systems; however, policy implementation has been sluggish. For instance, Phase-I of Delhi’s TOD hub faced major delays, with the commercial development component still absent. Compared with global pioneers, India still has much to achieve. Hong Kong MTR generates over 40 per cent of its total revenue from non-fare sources through its successful “Rail plus Property” model, while the country’s most mature network, the DMRC, anticipates only about 20 per cent of its income from NFR in 2024-25.
Going forward, it will be essential to ring-fence revenues from TOD and VCF initiatives so that they can be reinvested into metro operations and expansion. While metro systems in India are moving in the right direction, there remains considerable scope to unlock the full potential of NFR to achieve long-term financial sustainability.
Bhavya Bhandari
