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Touching bullet speeds

After US, Russian, and Chinese railways, India has the fourth-largest railway system in the world. The Indian rail network is spread over ~66,000 kms with about 7,100 stations. Close to 13,000 passenger trains carry more than 23 mn passengers daily. 

  •  Indian Railways envisages a prospective investment of USD 130.7 bn in the next 5 years
  •  Mumbai-Ahmedabad high speed rail project sanctioned at a total cost of USD 15 bn

 

100% FDI allowed under railway infrastructure under automatic route.

for more details refer FDI Policy 2017

HIGHLIGHTS

  • 4th largest railway system in the world
  • 1.4 mn-Single largest employer in India and 8th largest in the world
  • 4th largest rail freight carrier in the world

Industry Scenario

Indian Railways’ revenue for FY17 was estimated at USD 25.1 bn.

Indian Railways aspires to add 1.5% to India's GDP  by building infrastructure to support 40% modal freight share of India’s economy.

Two Dedicated Freight Corridors (DFC), one on the Western route (Jawaharlal Nehru Port to Dadri) and another on the Eastern route (Ludhiana to Dankuni), have been fast-tracked. INR 25,320 crore worth of contracts have been awarded in the last two years for the implementation of DFCs.

The Indian Railways is looking to award 6 tenders worth Rs 8,000 crores  (US$ 1.2 billion), for setting up a country-wide electricity transmission  network, as part of a strategy to reduce electricity bills.

  •  700 Stations to be fed with solar power in medium term
  •  48 Stations to be redeveloped in 2017-18
  •  3500 km Railway lines to be commissioned in 2017-18
  •  450 coaches to be exported to Australia
  •  3,360 km dedicated freight corridors by 2019

Growth Drivers

GD
  • Passenger traffic growth (2010-15)

    2.6%

  • Freight traffic growth (2010-15)

    4.3%

  • Avg daily passengers

    23 mn

  • Revenue from freight traffic (FY 2015-16)

    USD 16.5 bn

Key policies

Participative Policy of December 2012

Major objectives of the policy are as follows:

Non-Governmental Railway Private Line: Private entity acquires land and makes the investment in the line and can declare it as Non-Government Railway. Usually used for freight, but can be used in Railways.

BOT – Annuity: Construction risk is assigned to concessionaire and all direct and indirect risks are assigned to authority
BOT: Concession awarded through competitive bidding, for a period of 25 years.

Customer Funded: Railways pays up to 7% of the amount invested through freight rebate, till the funds provided by the project beneficiary are recovered with interest  

Joint Venture: Forming a JV with equity participation through Expression of Interest.

FDI Facts

  • FDI inflows (in USD) during Apr 2000-Jun 2017 in railway components

  • FDI equity inflow (in USD) during Apr 2014-Mar 2017

  • FDI allowed under automatic route for Construction, operation and maintenance of suburban corridor projects through PPP, High speed train projects, Dedicated freight corridors, Railway electrification, Signaling systems, Freight terminals, Passenger terminals, Mass Rapid Transport Systems & Infrastructure in industrial parks

Recent Investments

  • January 2017 - Indian Railways is planning to award 6 tenders worth USD 1.2 bn for setting up a countrywide electricity transmission network as part of a strategy to reduce electricity bills.

  • October 2017 - Alstom's rail locomotive plant in Madhepura, Bihar, starts production of first electric railway engine, GE imports prototype of diesel locomotive to be manufactured at Marhaura.

  • June 2017 - CIDB Holding (Malaysia) to invest USD 774.5 mn in redevelopment of Udaipur, Howrah, Indore, Secunderabad, Pune and Faridabad railway stations.

  • January 2017 - Indian Railways has circulated a draft cabinet note for setting up a dedicated USD 5 bn Railways of India Development Fund (RIDF).

  • May 2016 - Bombardier, the largest supplier to Delhi Metro has invested over USD 100 mn in India in the past two decades. It is eyeing up to USD 1 bn business from India in the next 5 yrs.

Major Investors