Private players could be allowed to run freight trains on DFC networks, says Ficci-Crisil report

Besides enhanced competition and better service levels in the sector, the move would allow the Railways to leverage private sector capital for world-class rolling stock.
Indian Railways

TLI Staff

New Delhi: Allowing private operators to run freight trains on Dedicated Freight Corridors (DFCs) and putting in place an independent regulator for rationalising freight rates are some of the key suggestions by a joint Ficci-Crisil report to increase modal share of the Railways and reclaim pole position in freight business.

The report said that private players can pay access charge to Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) for running freight trains on its network. The arrangement could bode well for both the parties.

Besides enhanced competition and better service levels in the sector, the move would allow the Railways to leverage private sector capital for world-class rolling stock.

“This is one of the models followed in many countries and several players operating internationally maybe interested in investing and operating in this area,” the report said.

As per the institutional arrangement envisaged for operations of DFCs, Indian Railways will be the sole customer for DFCCIL which will provide the infrastructure for the operation of trains. The Railways will pay a track access charge to DFCCIL and other customers/freight operators shall be routed through it.

Noting that high freight tariff had been plaguing the rail freight sector, the report recommended setting up of a regulator to rationalise rates. It said that India has among the lowest passenger rail tariffs and the highest freight tariffs in the world which negatively affects competitiveness of rail as a mode of freight transport.

“This is further corroborated by the fact that the operating ratio in fiscal 2018 for the freight segment was 58% vis-à-vis 192% for the passenger segment. Though cross subsidisation of the passenger segment through freight has merits, the extent of subsidisation is always debatable,” the Ficci-Crisil report noted.

“Therefore, an independent regulator that has a mandate to determine tariffs and the level of cross subsidisation shall help IR achieve competitiveness as a freight logistics service provider,” it added.

The Railways has been investing heavily in its infrastructure and plans to capture more market share in freight business. It has taken a slew of measures including discounts in freight rates to increase its share in freight movement.

The Ficci-Crisil report said that though there is a significant leeway in terms of an improvement in modal share and traffic volumes from many existing commodities Railways would need to capture new cargo streams to achieve its target of gaining 44% modal share by 2051 and doubling freight volumes by 2040.

Introduction of new wagons and building appropriate infrastructure could help the Railways enhance its share in commodities such as steel, cement, automobile and containers.

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