Indian Railways (IR) is considered the backbone of the country’s transport system. It is instrumental in not only facilitating long-haul bulk freight movement and long distance passenger traffic, but also in providing mass transit in the suburban areas of metropolitan cities. The railway sector has been one of the key focus areas of infrastructural development for several years. In Union Budget 2021-22, the government has allocated Rs 1,100.55 billion in its budget estimates to IR. The allocation is 1.06 per cent lower than the revised estimate of Rs 1,112.34 billion and 52.39 per cent higher than the budget estimate for 2020-21. Of the total allocation in 2021-22, Rs 1,071 billion has been allocated for central sector schemes and projects. IR has also issued the draft final report of the National Rail Plan, 2030 with the aim of creating a future-ready railway system in the country. Moreover, the budget has emphasised passenger convenience and safety, and proposed the introduction of an aesthetically designed Vistadome Linke Hofmann Busch coach on tourist routes to improve the travel experience of passengers.
Indian Infrastructure takes a look at the opportunities in the railway sector…
Big opportunities
Railway infrastructure is witnessing rapid development, with various upcoming and ongoing mega projects. IR has also set massive network expansion and decongestion targets. The construction of high speed rail (HSR) corridors is one such major upcoming opportunity. The HSR projects will entail a cumulative investment of approximately Rs 13.02 trillion over the next 15-20 years. Through the development of HSR corridors, IR aims to transform the conventional railway network by introducing world-class technologies. Meanwhile, the semi-HSR projects are expected to entail a cumulative investment of Rs 1.7 trillion. Of this, the Kasaragod-Thiruvananthapuram project will entail the maximum investment of Rs 660 billion, and is expected to be commissioned by March 2025. The national transporter has also identified several new HSR corridors under the National Rail Plan, 2030.
The western and eastern dedicated freight corridors (DFCs), which are being developed to segregate passenger and freight traffic on some of the country’s busiest rail routes, also offer major opportunities to stakeholders. The two DFCs are currently under construction. The western DFC will stretch from Uttar Pradesh to Mumbai, while the eastern DFC will stretch from Ludhiana in Punjab to Dankuni in West Bengal. The projects were expected to be completed by December 2021. However, due to disruption of work caused by the Covid-19 pandemic, the completion date has now been pushed back by six months to June 2022. Besides the two DFCs, another three corridors – the East Coast corridor from Kharagpur to Vijayawada, the East-West corridor from Bhusawal to Kharagpur to Dankuni, and the North-South corridor from Itarsi to Vijayawada – have been proposed to further provide exclusivity to freight traffic on the rail network. The proposed corridors will have a combined length of nearly 4,000 km, creating significant market opportunities.
Station infrastructure development is one of the most ambitious mega projects being undertaken by IR, as most of the stations on its network require a revamp. The station redevelopment plan is aimed at opening up about 20 million square feet of real estate, attracting nearly Rs 500 billion in investment. It offers immense market opportunities. Of the 123 stations currently on the list for redevelopment, IR aims to issue tenders for several in the coming months. In 2020-21, work has been awarded for major stations such as Delhi, Mumbai, Nagpur, Amritsar, Dehradun, Nellore, Tirupati and Puducherry.
Electrification is a major focus area for IR, in view of the cost savings from electric traction and a reduced carbon footprint. The national transporter plans to move to 100 per cent electrification by 2023, and become a 100 per cent net zero operator in the next nine to ten years. As of March 31, 2021, IR has completed the electrification of 45,881 rkm, which is 71 per cent of the total broad gauge network (64,689 rkm). IR is also working on the ancillary requirements of its electrification system, such as upgradation of signalling systems and procurement of electric locomotives.
In another development, IR has planned to source around 1,000 MW of solar power and 200 MW of wind power by 2021-22 across zonal railways and production units. To this end, solar plants aggregating 500 MW are to be installed on the rooftops of railway buildings to meet non-traction loads at stations. The Ministry of Railways (MoR) further plans to use its surplus land to generate 20 GW of renewable energy from the solar and wind installations set up under the Make in India initiative to power the IR network.
Suburban rails play a major role in the public transport systems of several major Indian cities. The Government of India approved the MoR’s proposal for the construction of the Bengaluru Suburban Rail Project in October 2020. It envisages the construction of four suburban rail corridors with a total route length of 148.17 km, as well as 57 stations. The project is proposed to be completed in six years at an estimated cost of Rs 157.67 billion. It is expected to provide a safe, accessible and comfortable mode of public transport. The Karnataka government has allocated Rs 8.5 billion to the project under the state budget 2021-22. The project will ease traffic congestion, enhance rural-urban connectivity and provide a cleaner mobility option to lakhs of daily commuters, while opening multiple opportunities for stakeholders.
Moving forward
The railway sector is slated to register a quantum leap in infrastructure development in the coming years. With freight trains remaining operational throughout the lockdown period, IR emerged as a lifeline, transporting essential items across the length and breadth of the country. Besides, as passenger services still remain curtailed due to Covid-19, the railway sector has now turned to the freight segment to combat its losses. Several tariff and non-tariff measures have been introduced in the past few months to unlock capacity in the freight segment. IR is leveraging technology to revamp its freight operation information system in order to provide last-mile connectivity and a freight e-marketplace, thus bringing about greater efficiencies in freight movement. The system is already under development and will be completed by December 2021.
In addition, the government is undertaking several initiatives to attract investment in the sector from domestic as well foreign private players, and other multilateral agencies. On September 22, 2020, IR sanctioned a feasibility study for seven bullet train projects, which are all open to public-private investments. Additionally, in July 2020, the MoR decided to create a special Project Development Cell in the Railway Board to increase investments and improve the inflow of foreign direct investment. It is expected that these initiatives will further open avenues in the railway sector.
As of December 2020, there are nearly 324 projects at the approved, announced and bidding stages, entailing an investment of about Rs 11.4 trillion. This investment will contribute towards network decongestion, network expansion and work that aims to address transporters’ concerns regarding safety, operational efficiency, declining modal share and overall competitiveness. The upcoming railway infrastructure, along with an attractive pipeline of projects, will provide a massive business opportunity for engineering, procurement and construction players, rolling stock providers, signalling and telecom players, electrification equipment manufacturers, and consultants.