railways poliy review
TRANSCRIPT
1
Railways
POLICY REVIEW 2020
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FOREWARD
I am pleased to present the Railways Policy Review. It comprises diverse points of view
across different industry sectors, this report provides a perspective of the economy in this
sector in India. Through this report, we aim to highlight the upcoming events and possibil-
ities with the objective of doing business in India.
I hope that this report will help business leaders navigate the increasing complexity
around value delivery in today’s environment. I would like to express my sincere gratitude
to all the participants of the survey.
I hope you find the report useful and insightful.
Best regards,
Priyanka Prajapati
CEO, LawDocs.
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INDEX
Summary. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 5
Reasons to invest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 7
FDI Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Sector Policy. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 9
Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Financial Support. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Investment Opportunities. . . . . . . . . . . . . . . . . . . . 12
Notable trends in Indian railways. . . . . . . . . . . . . . 13
Key achievements. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SUMMARY
• The Indian Railways runs 12,617 trains that carry 23 mn passengers on a daily basis.
• The Indian Railways motive to be the driver of India’s economic growth and develop-
ment by being safe, environmentally friendly & financially viable . The focus to get this goal
is through resolution of key concerns such as passenger experience, zero fatality, cost, sus-
tainability
• Private sector companies are being encouraged to participate in rail projects, which
were mostly in the public domain. Cabinet approved ‘participative models for rail-
connectivity & capacity augmented projects’, which allows private ownership of some rail-
way lines.
• India to build its first railway station inside tunnel at a height of 3,000 meters ,length
of 27 km on Bilaspur-Manali-Leh line in Himachal Pradesh.
• Indian Railways is targeting to triple freight traffic from current 1.1 billion tonnes* in
2017 to 3.3 billion tonnes by 2030.
• Indian Railways is planning to invest Rs 1,000 crore for setting up 11 new units to
double the capacity of its bottled water brand.
• Indian Railways has planned completion of electrification in next 4-5 years, that will
lead to energy savings worth Rs 10,000 crore .
• Various technologies such as electronic interlocking at all interlocked Broad Gauge
stations, Automatic Train Protection system have been introduced by Indian Railways.
• The government has decided to manufacture only Linke Hoffman Bushce type coach-
es from 2018-19 onwards.
• All electric locomotives have been provided with Vigilance Control Devices which
helps in checking the alertness of Loco Pilots.
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REASONS TO INVEST
• The railway infrastructure segment allows 100% foreign direct investment ,opening oppor-
tunities for participation in projects like high-speed railways, railway lines to and from coal mines
& ports, electrification, high-speed tracks and suburban corridors.
• The Ministry of Railways is making provisions to involve Public Private Partnership invest-
ments to improve passenger amenities. These amenities include foot-over bridges, escalators and
lifts at every major stations, automatic ticket vending machines at railway stations for dispensa-
tion of tickets, computerised passenger reservation system ,introduction of alternate train accom-
modation scheme for waitlisted passengers, “Vikalp”, etc
• The Dedicated Freight Corridor Corporation of India Limited is an undertaking by the Min-
istry of Railways to overlook planning, development and mobilisation of construction, financial
resources, maintenance and operation of the Dedicated Freight Corridors. 2 projects have been
commissioned under the DFCCIL –Eastern Dedicated Freight Corridor (1,856 km) and Western
Dedicated Freight Corridor (1,504 km). These corridors give India with the opportunity to create
one of the world’s biggest freight operations. This is predicted that 92 mn tonnes of traffic would
move through the Eastern Dedicated Freight Corridor. Dedicated Freight Corridors are also ex-
pected to reduce GHG emissions
• Certain stations have been identified to be developed as per international standards with
modern amenities and passenger amenities on the lines of newly developed airports, using PPP
model
• Project Swarn has been initiated to get better passenger experience of the Rajdhani and
Shatabdi Express Trains. Dimensions that will be worked on are coach interiors, toilets, staff be-
haviour, catering, onboard cleanliness, linen, punctuality, security and on-board entertainment.
. The Central Organisation for Railways Electrification has electrified a total of 29,288 route kil-
ometre till 2017-18, which accounts for about 43.5% of the total RKM of the Indian Railways.
• Speed enhancement projects have been initiated to increase the speed of trains on two
routes – New Delhi-Mumbai Central and New Delhi-Howrah –160 to 200 kmph. Speed enhance-
ment project includes works like fencing, removal of level crossings, train protection warning sys-
tem, mobile train radio communication, automated and mechanised diagnostic systems, etc.
•
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STATISTICS
• The Indian Railways operates more than 20,000 trains every day, to move above 3 mn
tonnes of freight traffic and more than 23 mn passengers daily
• The total track length of the Indian Railways is 123,236 km, connecting 7,318 railway
stations
• In 2017-18, 29,376 km of railway line was electrified.
• A total of 13,452 passenger trains and 9,141 goods trains are operated daily
• The construction of the 4.9 km long Bogibeel Bridge was completed. This is the longest
rail-cum-road bridge in India and reduces the journey time from Itanagar to Dibrugarh to only
5 hours from 24 hours.
• The first phase of the Eastern Dedicated Freight Corridor (Bhadan to Khurja, 200 km) ,
Western Dedicated Freight Corridor (Rewari to Madar, 200 km) have been completed.
• Between April 2014 and December 2018, 3,601 bridges have been repaired, strength-
ened, rehabilitated or rebuilt by the Indian Railways.
• The Indian Railways achieved the country’s highest ever freight loading in 2018-19. The
Freight earnings are expected to be valued at $20.5 Bn in budget estimates 2019-20.
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FDI POLICY
FDI Policy permits 100% FDI in railways infrastructure sector. FDI is permitted in the construction,
operation & maintenance of the railway transport industry:
1. Suburban corridor projects through PPP model
2. High-speed train projects
3. Dedicated freight lines
4. Railway electrification
5. Signalling systems
6. Freight terminals
7. Passenger terminals
8. Rolling stock including train sets, and locomotives/coaches manufacturing and mainte-
nance facilities
9. Mass Rapid Transport Systems
10. Infrastructure in industrial park pertaining to railways line/sidings including electrified rail-
ways lines and connectivity to the main railway’s line.
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SECTOR POLICY
• In 2016, the Ministry of Railways developed National Rail Plan 2030. Aim of the
Plan is to harmonise and integrate the rail network with other modes of transport to get
a seamless multi-nodal transportation network across India.
• The Indian Railways formulated Policy for Participative Investment Models in Rail
Connectivity & Capacity Augmentation Projects to attract private capital for accelerated
construction of fixed railway infrastructure. This Policy aims to strengthen, modernise
and expand the Indian Railways network
• In 2015, the ‘Foreign Rail Technology Cooperation Scheme’ was launched to get
higher quality rail service for the country. MoUs have been signed in the past for tech-
nical cooperation with a number of foreign railways or their entities.
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STRATEGIES ADOPTED BY INDIAN RAILWAYS
Revenue-based strategies
• Indian Railways has set a target of US$ 5.95 billion revenues from monetising, railways in the next
10 years. By doing so, railways aims to increase earnings through traditional as well as non-traditional
sources, and reduce expenditure.
• Provision of online rail bookings, hotel reservations and retiring rooms by IRCTC adds to revenues
of the Indian Railways and are focusing on international tourists and have also come up with many tour
packages for foreigners.
Turnaround strategies for freight traffic
• The average speed of freight trains would increase to 50 km/h and Mail/Express trains to 80 km/h
by the end of 2020.
• Axle load was increased from 20.3 tonnes to 22.9 tonnes and 25 tonnes for selected routes and
freight discounts are allowed to customers offering high tariffs
Turnaround strategies for passenger traffic
• Fare for premium classes were reduced so as to compete with the airlines, luxury buses and per-
sonal transport vehicles
• Increasing speed of the trains in 9 railway corridors to 160 and 200 kmph, to decrease the time of
inter-metro journeys
• The length of popular trains was increased from 16–18 coaches to 24–26 coaches
• Indian Railways reduces the load of trains which have low occupancy and enhances the load of
well-patronised trains to get better occupancy in trains.
• Private participation is encouraged and information technology was used to make ticket reserva-
tion extra feasible to passengers along with an airline-style upgradation from lower class to higher class
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FINANCIAL SUPPORT
FOR MANUFACTURING ACTIVITY:
STATE INCENTIVES:
• State governments offer additional incentives for industrial projects. Incentives are in areas like
rebates in land cost, relaxation in stamp duty on the sale or lease of land,concessional rates of interest on
loans, power tariff incentives, investment subsidies or tax incentives, backward areas subsidies and spe-
cial incentive packages for mega projects.
• The Ministry of Railways is in a continuous process to sign Joint Ventures with the states to expe-
dite the process of railway network. The Government of Jharkhand is 9th state to form a Joint Venture
with the Ministry of Railways to construct rail line of 222 km at a cost of USD 0.33 billion .
AREA BASED INCENTIVES:
• Incentives for units in Special Economic Zones / National Investment & Manufacturing Zones as
specified in respective Acts or setting up of projects in special areas such as the Jammu & Kashmir, North-
east, Himachal Pradesh & Uttarakhand.
EXPORT INCENTIVES:
Various kinds of incentives on exports are available under foreign trade policy
Key points in the Rail Budget 2019-20:
• The operating ratio to improve to 95% in 2019-20 (BE).
• Capital support of $9.7 Bn for the Indian Railways
• Semi high-speed ‘Vande Bharat Express’ introduced. It is the first train to be indigenously devel-
oped and manufactured in India
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INVESTMENT OPPORTUNITIES
• Suburban corridor projects through PPP
• High-speed train projects
• Upcoming dedicated freight lines
• Railways electrification
• Signalling systems
• Freight terminals or logistics parks
• Passenger terminals
• Rolling stock including train sets and locomotives or coach manufacturing and mainte-
nance facilities.
• Rolling stock procurement
• Bio-toilets
• Technological solutions for manned and unmanned level crossings
• Technological solutions to improve safety and reduce accidents.
• Railways technical training institutes
• Testing facilities and laboratories41
• Concessions in standalone passenger corridors (brand lines, hill railways, .)
• Non-conventional sources of energy
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NOTABLE TRENDS IN INDIAN RAILWAYS…
Demand for urban transport-
• The central government inaugurated the Pune Metro Rail project on December 24, 2016. The met-
ro line would have 30 stations and 1st phase would cover a distance of 31.25 km. This project is estimat-
ed to be completed by 2021 at a cost of US$ 1.67 billion. In December 2018, Prime Minister of India laid
the foundation stone for the third phase of the Pune metro.
• There is a rapid raise in demand for urban mass transportation systems in the nation. Several met-
ro rail projects are in progress to improve connectivity within cities.
International Investment-
• IR has attracted increasing foreign investments through strategic alliances with various countries
over the last few years.
M-ticketing and Eticketing-
• In May 2018, IRCTC introduced its mobile android app which can be utilised by IRCTC e-wallet us-
ers to book erail tickets.
• As of July 2018, Indian Railways has decided to start accepting soft copies of documents placed in
DigiLocker of customers.
Travel Insurance Scheme-
• Railways has rolled out its insurance scheme for passengers, under which they can purchase a pre-
mium of 1.52 cents while booking a ticket to get an insurance cover of up to US$ 1.5 thousand.
Semi high-speed trains projects-
• Companies from France, Russian & China have joined hands with Indian Railways to bring 3 semi-
high speed rail corridor projects on track.
• IR intends to look for cost effective options to increase speed to 160–200 km per hour on existing
routes like Delhi–Chandigarh and Delhi–Agra.
Bullet Trains-
• Average speed of faster trains will increase from the existing 110 and 130 kmph to 160 and 200
kmph respectively
• Studies are being commissioned for other high speed routes in the diamond quadrilateral
• In Union Budget 2018-19, an amount of Rs 7,000 crore was allocated for the bullet train project.
• India is keen on manufacturing and exporting bullet train coaches to possibly bring down oper-
ating cost of Shinkansen trains.
New Services Launched-
• Under Budget 2018-19, railway lines of 4,100 kms will be commissioned & 600 stations will be tar-
geted to be redeveloped during the year.
• Around 4,100 km of Railway lines are expected to be commissioned in 2018-19
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KEY ACHIEVEMENTS
• Safety has been of foremost importance to Indian Railways. There has been
an 81% drop in the number of deaths from 152 during 2013-14 to 29 during 2018-
19.
• The Indian Railways has focused on digital initiatives to become more trans-
parent and accountable.
• The semi-high speed self-propelled Train 18 is being manufactured in India,
boosting the Government’s ‘Make in India’ initiative.
• India’s longest rail-road bridge connects Assam and Arunachal Pradesh, thus
making the Northeast accessible by train.
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FOREIGN INVESTORS
• Alstom Transport Holdings B.V. (Netherlands)
• Bombardier (Singapore)
• Ansaldo STS (Australia)
• Inversiones EN Concesiones (Spain)
• GE Capital International (Mauritius)
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N O T E S
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N O T E S
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