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After Private Passenger Trains Indian Railways Mulls Private Freight Trains

Buoyed by the early response to private passenger trains, the National Transporter is now planning to go ahead with private freight trains as well. It is fast-tracking the process of auctioning routes in the yet-to-be completed dedicated freight corridors (DFCs) to private operators to run freight trains. The plan is, when the first lot of private passenger trains starts running in 2023, the Railways would like to start private freight trains as well.

As the process of private passenger trains is already underway, the Railways is likely to package freight trains as an added attraction. An early mover in the passenger segment could end up clinching lucrative freight train operations as well. A train manufacturer will be more enthused to set up a new factory or expand an existing one if there are opportunities to produce both coaches and wagons.

For any private rail venture, be it passenger or freight, the investor would like to be sure of gains before pumping millions of rupees into it. It is in this context that auctioning freight routes to private players becomes significant. Railway Board chairman Yadav confirmed the development.

“A railway regulator will be created before the rollout of private passenger trains in 2023. Once DFCs are ready, we are planning to bring in private freight operators there. They will invest in wagons and containers. So, the regulator will have two mandates — regulating passenger trains and freight trains,” he said to a leading business newspaper, adding that the group of secretaries weighed all possible fallout of the economic downturn before coming to a conclusion that private companies would look for new areas of investments, making the railway projects a good candidate.

Anurag Sachan, MD of DFC Corporation of India Ltd (DFCCIL), said the company has been preparing background papers for the auctioning of routes and the introduction of private freight trains. “We are likely to engage private players first in Private Passenger Trains the 650 km stretch between Palanpur (Gujarat) and Rewari (Haryana), which will be operational this fiscal,” he said.

The new deadline for the completion of the entire DFC project is June 2022. While the details of the private freight train project, pertaining to number of trains, routes as well as the expected amount of private investment, are not in the public domain, the process is likely to be simpler than the one for passenger trains.

Wooing private players for passenger train operations is trickier because it is a politically sensitive issue. The Congress and the Left parties have already expressed their reservations about the venture. Although 151 private trains constitute only 5% of long-distance trains, this move is suspected to be a baby step towards privatising the Railways.

Further, unlike the profit-making freight business, passenger operations in the current format can at best recover 50% of investments, making this an unviable business proposition to a private investor. Premium trains such as Rajdhani and Shatabdi, however, make operational profit the moment their occupancy rate is 60-65%, said a railway officer.