The Indian Railways is upping its game to capture a larger slice of Indian freight traffic from the road transport sector - a target of 50 per cent share of the country's total freight traffic by 2030. This includes many measures and slowly phasing out cross-subsidies that have made the cost of logistics in India prohibitive for businesses.
The Indian Railways is pulling out all stops to regain the ground it has lost to the road transport sector. Railways Minister Piyush Goyal has set an ambitious target of achieving a 50 per cent share of the country's total freight traffic by 2030, up from a little more than 33 per cent now. Then, he has also set a target of reducing freight costs and time taken to transport goods to make Indian Railways the preferred logistics option of foreign and domestic investors in India.
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The Ministry is also in the process of inviting private participation in the running of passenger trains to improve passenger experience, push the Make in India initiative and earn additional revenues.
In keeping with the mantra of the Narendra Modi government of using technology to improve the ease of doing business in India and in line with its target of increasing the share of railway freight traffic and revenues, the Indian Railways has developed a portal to connect customers to senior railway officials.
This portal, called Freight Business Development (FBD), has been developed by the Centre for Railway Information Systems (CRIS) at the direction of the Railway Board. It will also facilitate the registration of complaints and help address the concerns of various freight customers.
A Railway Ministry statement said: "The FBD has been specially designed and developed with a ′Customer First′ philosophy and helps in familiarising new freight customers with Indian Railways' freight business. The portal presents a bouquet of information on IR Freight Business organised in simple and easy access links."
By enabling real-time tracking and resolution of queries and concerns - thus, improving ease of doing business - this portal will also facilitate the acquisition of new customers by the Railways.
In another major initiative, the Indian Railways plans to let the private sector run 151 passenger trains on 109 pairs of routes. It recently invited Requests for Qualifications (RFQ) from domestic and foreign players for the same.
It has received bids from 15 companies such as Indian infrastructure behemoth L&T, airports operators GMR, public sector companies BHEL and IRCTC as well as Arvind Aviation, Cube Highways and some others in response to the RFQ.
This move will help the Indian Railways make a quantum leap in technology adoption, run trains at much higher speeds and improve its levels of service to passengers.
By opening up yet another government monopoly to foreign and domestic players, Goyal is redeeming a major promise of the Narendra Modi government to allow the private sector entry into every single segment of the Indian economy. Indian Finance Minister Nirmala Sitharaman had made this commitment while announcing the $265-billion stimulus-cum-reforms measures in the middle of May.
The Indian Railways faces massive budgetary constraints, which often delays the adoption of the latest technologies and safety measures. It leads to non-renewal of rolling stock, sub-optimal maintenance of existing infrastructure and inefficient use of capital and manpower resources.
The Railway Ministry estimates that it needs about 20,000 trains to meet the demand but it currently runs only about 13,000 trains. Budgetary constraints are the main reason for this shortfall in the supply of trains. The entry of the private and foreign players into this sector can help bridge the gap.o run
According to the Economic Survey of India, 2019-20, most goods made in India take 7-10 days to reach a port whereas in China, Bangladesh and Vietnam, the time taken is less than a day. Border and documentary compliances for exports takes 60-68 hours and it costs $260-281 in India; in Italy, it takes just one hour and costs nothing. The problem area: logistics and bureaucratic hurdles.
Then, one of the conditions for qualification is that most of these new trains will have to made in India in line with Modi's Make in India programme. This will facilitate the absorption of new technologies, generate thousands of new white- and blue-collar jobs in the country and drive GDP growth.
The logistics sector in India is hobbled by high costs as railway freight rates have been routinely used by previous governments to subsidise passenger fares. This has made the cost of transporting goods by train in India among the highest in the world.
The Comptroller and Auditor General (CAG) has said in its audit report for 2018-19 that the average subsidy on every passenger ticket was 47 per cent of the cost, i.e., passengers pay only 53 per cent of what it costs to transport them from one place to another. This led to a loss of about $4.5 billion that year. This loss was balanced by the profit the Indian Railways earned on the carriage of freight.
These initiatives will help rationalise rates of both freight and passenger fares, reduce logistics costs, improve passenger amenities, improve the ease of doing business, push the Make in India agenda and generate employment for thousands of people.