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Rail Industry In India

As on March 2013, IR has a total route network of about 65,436 kilometers, of which 20,884 are electrified.

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Definition / Scope

  • Indian Railways (IR) is owned and operated by the Government of India through the Ministry of Railways. IR is mainly running two types of services – Passenger and Freight.
  • India has largest passenger carrier and fourth largest freight carrier in the world which runs more than 19,000 trains.
  • As on March 2013, IR has a total route network of about 65,436 kilometers, of which 20,884 are electrified.

Market Overview

  • IR runs 12,617 trains to carry over 23 million passengers per day connecting over 7,172 stations and runs more than 7,421 freight trains to carry about 3 million tons of freight every day.
  • IR has total track length of 116,400 km. It also comprises 63,870 coaches, more than 240,000 wagons, 9,549 locomotives and 1.3 million employees.
  • IR has begun exploring Public Private Partnership (PPP) model and aims to award projects worth USD 1,000 billion through PPP route.
  • Union Budget 2014-2015 envisages a diamond quadrilateral network of high speed trains connecting major metro cities and growth centers of the country.
  • IR launched mobile tracking service, which enable customers to receive tickets on SMS. Additionally, it also upgrade its system to support booking of 7,200 tickets per minute compared with the past capacity of 2,000 tickets.

Key Metrics

Metrics Value Explanation
Base Year 2016 Researched through internet


Top Market Opportunities

Freight Traffic

  • With increasing participation expected from both domestic and foreign players, freight traffic is expected to rapidly over the medium to long term.
  • IR has set a target of having a freight market share of 50% by 2020 from 35% from in FY09.
  • With rapid economic growth and increasing industrialisation, freight traffic is expected to reach 2165 million tonnes by FY20 from 1050 million tonnes in FY14.

Increasing Metro Projects

  • Total investment in metro rail as of now is about USD 16.7 billion and it is expected to reach USD 42 billion by 2020.
  • Union Budget 2015 anticipating diamond shaped metro projects connecting major metro cities and growth centers.
  • The Delhi Metro saves 2 million barrels every year by taking petrol and diesel vehicles off the road.

Infrastructure Projects

  • High speed train
  • Dedicated freight corridors
  • Electrification of route
  • High speed tracks and suburban corridors
  • Re-development of railway stations
  • Power generations
  • Setting up of wagons, coaches and locomotive units
  • Gauge and network expansion

Market Drivers

Increasing PPP

  • IR aims to boost passenger amenities by involving PPP investments in provision of foot-over bridges, escalators and lifts at all major stations and development of identified stations to international standards.
  • To boost business activity and strengthen rail connectivity with various ports, IR has floated Special Purpose Vehicle (SPV) under the PPP model. Railways will facilitate connectivity of new and upcoming ports through private participation.
  • It has been planned to construct a new Dedicated Freight Corridor (DFC), initially covering about 2700 kms route equivalent to around 5000 track kms at a cost of about USD 6 billion linking ports of western India and the ports and mines of eastern India to Delhi and Punjab with a large components of PPP.

Increase of Freight Traffic due to Industrialization

  • Freight traffic increased more than 15 times over FY1951-2012.
  • Increase in Freight traffic is generated from these industries: coal, iron and steel, iron core, food grains, fertilizers, petroleum products etc.
  • The rise in the freight traffic is evident from the growth in Freight Traffic Growth Index, which is 100 in base year FY1951 and increase to 1516 on FY2012.

Increase of Passenger Traffic due to Rising Income and Urbanisation

  • Passenger traffic increased more than 15 times over FY1951-2012.
  • Increasing income in rural and urban areas have made rail travel affordable to large number of people.
  • Improvement in rail connectivity, introduces high speed trains and increase passenger amenities will further increase passenger growth.

Modernisation and Improved Safety

  • IR introduced a more user-friendly system, with internet ticketing timings increased to 23 hours a day from 0030 hrs to 2330 hrs.
  • Self-Propelled Accident Relief Trains (SPART) are introduced on trial basis with a view to establish a fast and reliable disaster management system.
  • A modern signaling system, train-protection warning system, and a special railway safety fund have been initiated to ensure passengers safety.
  • Expansion of new generation freight and passenger rolling stock with advanced technology features with capability for higher speeds and lower unit costs.
  • Specially designed coaches for adverse weather conditions for the rail travel in places like Kashmir are introduced.

Industry Challenges

Safety

  • Factor responsible for increasing number of railways accidents are overaged tracks, wagons, coaches, bridges and signaling system. Nearly 25% of the total railway track in India is overaged and is due for replacement.
  • Highest number of fatalities over IR occur due to accidents at unmanned level crossings. Still, the number of accidents at unmanned level crossing has reduced over the years due to various measures taken by IR. As on 1st April 2014, 11,563 unmanned level crossing were still required to be eliminated.
  • The issue of accidents on account of loco drivers’ is being considered under technological intervention. Automatic Train Protection (ATP) systems mitigate the safety risk due to loco drivers’ error or over speeding leading to collisions.

Old Track and Poor State of Rolling Stock

  • The major problem faced by IR is that the tracks are old and outdated. These causes many serious railway accidents.
  • The problem has further resulted in speed restrictions. In every new time table of trains, running time of many trains have been increased.

Speed of the trains

  • In the current scenario the speed of passenger trains and goods trains in India is slow as comparison to other countries. The engine of the passenger trains can travel at a maximum speed of 150km/ph.
  • New trains are introduced every year, but due to the major difference in the ratio of the new lines and dedicated freight corridor these trains have to bear the brunt of traffic congestion and thus delaying them. However IR have announced some semi-high speed trains in coming year that will move at a speed of 200km/ph.

Other Problems

  • IR are facing stiff competition from road transport and thus its share in passenger and goods traffic is declining.
  • Lots of stalled project in the IR. Ministry of Railways’ informed that of 674 projects in the last 20 years, only 312 have been completed.
  • IR are the largest consumer of diesel. Any increase in the rates of diesels, adversely affect the financial resources.
  • IR face a serious problem of low level of employee connectivity and lack of skilled staff and engineers.

Market Size and Forecast

  • With the improvement in the economy, reforms in government policy and increasing industrial activity, it is expected that the IR will touch the revenue of USD 44.50 billion by 2020.
  • The increase in fare effective June 2014 is expected to increase Railways revenues by USD 1.5 billion in FY2015.

Segment-Wise Revenue Growth for IR

Earning From Passenger Trains

Earning From Freight Trains

  • The major revenue of IR comes from freight traffic, which accounts two third of the total revenue.
  • IR generated about USD 15.5 billion from Freight trains and USD 6.2 billion from Passenger trains in FY14.
  • Increasing carrying capacity, cost effectiveness and improving service quality causes increase in the revenue and it will further increase in the future.

Market Outlook

  • In the next five years, the IR market will be the 3rd largest, accounting 10% of the global market, with Metro rail going to be 70% of the railway market in India.
  • By 2020, IR would make all efforts towards delivering safe and punctual services, increase average speed by 50%.
  • In next five years it is expected to see lots of change in IR. Faster trains, Modern trains, Swanky stations, Skilled staff will be the Railways of tomorrow.
  • A memorandum of Understanding (MoU) and an Action Plan have been signed between the Government of India and People’s Republic of China to improve technical cooperation in the railway sector.
  • It is expected that in the next 10 years the railways lines will be connected completely via electrification.
  • Rapid urbanisation along with increased domestic industrial activity is expected to accelerate growth of IR during the current decade. According to the Ministry of Railways’ estimates, demand for passenger and freight services would surge, which would require expansion of 25,000 kms of new lines by 2020.

Key Market Players

Key Players in IR

  • Container Corporation of India (CONCOR)
  • Dedicated Freight Corridor Corporation of India (DFCC)
  • Rail Vikas Nigam Limited (RVNL)
  • RailTel

Private Players in IR

  • Punj Lloyd
  • Kalindee
  • Larsen & Turbo

Foreign Players in IR

  • Electro-Motive Diesel (EMD)
  • Bombardier Transportation
  • General Electric International Inc. (GE)
  • Siemens

References


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