RAILWAYS

November 2010

RAILWAYS

November 2010

Contents
 Advantage India

 Market overview
 Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations
2

pdf. it is the world’s second-largest employer. Indian Railways website.in/indianrailways/VISION%202020_Eng_SUBMITTED%20TO%20PARLIAMENT. The Indian Railways network transports 18 million passengers and more than 2 million tonnes of bulk freight every day. The Indian Railways has launched fuel-efficient. Ernst & Young. http://www. One of the largest rail networks in the world Environmentfriendly Significant government investments The GoI (Government of India) has proposed funds worth US$ 3. Catalyst for large-scale employment opportunities Advantage India Huge capacity augmentation Key facilitator of economic activity The Indian Railways plans to increase the capacity of its double/multiple lines from 18.5 billion (INR 167.indianrailways. recyclable and low-emission trains to achieve certified emission reduction credits.000 km as on December 2009 to more than 30.000 km.52 billion) in its budgetary estimates (BE) 2010–11 to modernise and develop India’s rail infrastructure.000 km by 2020. Rail contact 2008. Sources: Indian Railways: Vision 2020. 2008 3 .5 million.ADVANTAGE INDIA Railways November 2010 Advantage India The Indian Railways comprises the world’s fourth-largest rail network under a single management with a total track length of 64. accessed 11 November 2010.gov. With a workforce of about 1.December 2009.

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 4 .

5 billion.300 locomotives. China India Canada Germany France South Africa 63.000 14.000 1.pdf.706 84.897 29.000 • • The Indian Railways contributes 2.000 11.‖ December 2009.158 Number of employees 187.gov.000 13.31. • In 2007–08. Comparison of India’s rail network with other countries Countries United States Russia Network length (kms) 226.17 billion and US$ 4. it has 225.050 9.000 2. Currently.000 trains every day. The Indian Railways has a total network of about 64.000 36. • The Indian Railways has attracted significant attention from overseas players recently due to its successful turnaround to profitability. Indian Railways ranked higher than many fortune 500 companies.67.000 wagons.indianrailways. http://www.000 • Japan Australia 20.28.in/DEPTTS/planning/Whitepaper/White%20Paper_Eng_SUBMITTED%20To%20Parliament.487 20. Source: “White paper on Indian Railways. and operates more than 18.32.66.06. respectively. 45.000 coaches and 8.000 kms (route kms). its cash surplus before dividend and net revenue amounted to about US$ 6. As a result.639 1. spread across 8.3 per cent of India’s GDP.637 63. the Indian Railways has played an integral role in the development of India’s industrial and economic landscape.000 • It is the fourth-largest network in the world.000 34. Indian Railways website.042 33. accessed 11 November 2010 5 .000 stations.MARKET OVERVIEW Railways November 2010 Market overview • In 150 years of its existence.488 24.327 57.

This represents an increase of 54 million tonnes over revised estimates of 2009– 2010.1 500 2005–06 2006–07 2007–08 2008–09 2009-10 Source: ―White paper on Indian Railways.in/DEPTTS/planning/Whitepaper/White%20Paper_Eng_SUBMITTED%20To%20Parliament.gov. Growth in freight traffic 900 833. The Ministry of Railways has set a freight-loading target of 944 million tonnes in the Union Budget 2010–11.5 888. • In 2009–2010..9 In million tonnes 727.MARKET OVERVIEW Railways November 2010 Market overview: performance of freight and passenger traffic … (1/2) • • The Indian Railways transports about 40 per cent of India’s total freight traffic and 20 per cent of the country’s passenger traffic.3 793.‖ Indian Infrastructure.‖ December 2009. http://www.6 per cent over the previous year. Indian Railway Finance Corporation Ltd 2009–10 Annual report.indianrailways.pdf. • The freight segment accounts for about 70 per cent of Indian railways overall revenues. Indian Railways website. Sector focus: ―Railways.8 700 666. August 2010 6 . its freight traffic amounted to 888 million tonnes and recorded an increase of 6. accessed 10 November 2010.

6 million tonnes.8 million in the country.219.396 million to 3.‖ December 2009.860 million and non-suburban traffic from 2.2 7. Sector focus: ―Railways.0 7.500 2.329 million to 3. accessed 10 November 2010.MARKET OVERVIEW Railways November 2010 Market overview: performance of freight and passenger traffic … (2/2) • In 2009–2010.725.7 Between 2005–06 and 2009–2010.500 6. Source: ―White paper on Indian Railways.500 In million 4.581.in/DEPTTS/planning/Whitepaper/White%20Paper_Eng_SUBMITTED%20To%20Parliament.pdf.558. http://www.442.096. August 2010 7 .0 6. Indian Railways website. passenger traffic amounted to 7.gov.indianrailways.500 500 2005–06 2006–07 2007–08 2008–09 2009–10 5.‖ Indian Infrastructure..442.0 6. suburban traffic increased from 3. • Growth in passenger traffic 8.

6 per cent in the Tenth Five Year Plan (2002–07) to 4.2 billion (INR 9. Till date.000 kms of its network by 2020.MARKET OVERVIEW Railways November 2010 Growth drivers Increased government expenditure on rail infrastructure • The GoI has increased its allocation of funds to the Indian Railways to US$ 3.4 per cent between 2005–06 and 2009–2010.000 kms of new lines by 2020.7 per cent in the same period.5 billion) or 6 percent from its estimates for 2009–2010.1 per cent based on the revised estimates of the Eleventh Five Year Plan (2007–2012). Furthermore.52 billion) in its budgetary estimates (BE) for 2010–11. it aims to electrify 33. The Indian Railways plans to add 25. with a major increase in Public Private Partnerships (PPPs).5 billion (INR 167. 8 . The Indian Railways has allowed private sector entities to operate container trains. concession agreements have been signed with 16 companies for the provision of container services. Heightened private sector participation in the development of railway infrastructure • • • The private sector’s contribution to railway projects has increased considerably over the years from 0. Growth in freight and passenger traffic • • Freight traffic has increased at a compound annual growth rate (CAGR) of 7. which indicates a rise of about US$ 0. Passenger traffic has increased at a CAGR of 6.

to enhance private sector participation. the modernisation of metro stations and manufacture of rolling stock. Bombardier Transportation (established in 1995). The development of metro projects is now being proposed for cities such as Jaipur. Increase in international investments • • The Indian Railways has attracted investments from overseas through strategic alliances with various countries. Furthermore. to cater to orders worth US$ 137 million secured from the Delhi Metro Rail Corporation (DMRC). Ludhiana and Kanpur. Metro projects have already been initiated in Delhi. The policy aims to retain and increase the share of the railways in freight traffic. Kolkata. wagons and locomotives through special purpose vehicles (SPVs). including coaches. Some recent PPP projects undertaken/under implementation include the construction of dedicated freight corridors (DFCs). which are 20 kms or more in length. • Rising demand for urban mass transportation • • The GoI has introduced several metro rail projects to improve connectivity between cities. 9 . to meet the rapid increase in the demand for urban mass transportation systems in the country. Bengaluru. Chennai. has set up a new facility at Savli in South Gujarat.MARKET OVERVIEW Railways November 2010 Key trends • • Expanding scope of PPPs • The Ministry of Railways has proposed the development of 50 world-class stations in the PPP mode to improve and enhance rail infrastructure in the country. the Indian Railways has introduced an R3i policy related to infrastructure. Hyderabad and Mumbai. a subsidiary of Swiss-based Bombardier Inc. This policy is applicable for proposals for new lines. Lucknow.

MARKET OVERVIEW Railways November 2010 Key trends: status of metro projects in India Name of project Delhi Mass Rapid Transit System Cost of project (US$) Phase I: 2.7 1.html.9 45.3 14.0 14.co.2 Phase II: 0.com/projectsupdate/present_status.1 Phase II: 121.aspx.6 1. 10 . ―Project update.11 Length of project (kms) Phase 1: 65.5 Kolkata Metro Rail Project Bengaluru Metro Rail Project Hyderabad Metro Project Mumbai Metro Project Phase-II Chennai Metro Rail Project 1.6 31.in/fund. http://www.7 42. accessed 8 December 2010 Note: This is an indicative list. accessed 12 November 2010. http://bmrc.delhimetrorail.0 Source: Ministry of Urban Development’s FY09 annual report.‖ Delhi Metro Rail Corporation Ltd website.8 Due date of completion Phase I: Completed in November 2006 Phase II: Completed on 30 October 2010 • Qutub Minar–Gurgaon Metro corridor operational on 21 June 2010 • Chhattarpur Metro station operational on 26 August 2010 2014–15 September 2012 Early 2013 2015 Between 2014 and 2015 Delhi Metro Phase-II to Gurgaon 0.‖ BMRCL website.3 71.0 1. ―Project highlights.6 3..

construction of bridges.7km viaduct. several public sector undertakings (PSUs) and private players are involved in allied activities such as track laying and maintenance. signalling and telecommunications works). installation and commissioning of signalling and telecommunications facilities at NTPC Kalindee Rail Nirman Engineers Sources: Relevant company annual reports and websites Note: This is an indicative list. east-west corridor for Kolkata Metro Rail Corporation Limited Installation of signalling to double railway line between the Gooty and Pullampet section. Rewari–Phulera–Ajmer gauge conversion Creation of optical fibre cable-based communication infrastructure for train operations Construction of an elevated metro rail viaduct in Delhi. 11 . maintenance of coaches and wagons. gauge conversion of VilluPuram-Mayiladuthurai section. stations. However. construction of a 300-km dedicated eastern corridor Partial design and construction of a 4.MARKET OVERVIEW Railways November 2010 Key players Rail projects in India have typically been in the public sector domain. Delhi–Rewari gauge conversion of second line. Company Container Corporation of India Limited Key projects/services offered Setting up a multi-model logistics park (MMLP) in Rajasthan Dedicated Freight Corridor Corporation of India Limited Rail Vikas Nigam Limited RailTel Corporation of India Limited Punj Lloyd Gammon Infrastructure Limited A DFC project Surat–Hazira new line (Gujarat). Bharuch–Samni–Dahej gauge conversion (Gujarat).

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 12 .

101 200 222 2008–09 24.300 337 14.881 150 186 2007–08 22.684 129 148 2006–07 21.482 789 934 *Upgradation/expansion setting up of PU/Workshops 13 .753 33 193 33 3.115 38 535 64 3.933 57 251 64 2.623 90 121 2005–06 18.193 220 257 Total 107.681 27 176 88 2.992 36 145 88 2.474 191 1.INDUSTRY INFRASTRUCTURE Railways November 2010 Industry infrastructure … (1/2) Rolling stock * Year Wagons (four-wheeler units) Diesel multiple units Electric multiple units (EMUs) Main line electric multiple units (MEMUs) Coaches Electric locomotives Diesel locomotives 2004–05 19.

093 4.80 billion).gov.in/es200809/chapt2009/chap97. accessed 24 January 2010.indianrailways.549 426 502 2008–09 357 563 363 797 Total 1. accessed 14 January 2010 * Includes replacement of rolling stock 14 .16 billion (INR 7.8 per cent. ―Railways: Economic Survey 2008-09.‖ Government of India: Union budget and economic survey website. Between 2008 and 2009. Indian Railways website.082 386 361 2007–08 156 1.pdf.INDUSTRY INFRASTRUCTURE Railways November 2010 Industry infrastructure … (2/2) • • On an average.in/DEPTTS/planning/Whitepaper/White%20Paper_Eng_SUBMITTED%20To%20Parliament.717 1.687 2.150 • Sources: ―White paper on Indian Railways. Between 2004–05 and 2008–09 wagons (four-wheeler units) have increased at a CAGR of 4. 797km of railway lines have been electrified with an investment of US$ 0. http://indiabudget.nic.pdf.‖ December 2009. 220 kms of new lines are added on an annual basis in the country. Growth in fixed infrastructure (in kms) Year New lines Gauge conversion Doubling Railway electrification 2004–05 150 779 282 320 2005–06 180 744 231 170 2006–07 250 1. http://www.

nic. extending for a total length of 3. Source: ―Railways: Economic Survey 2008-09. The total cost of the project is US$ 10. The SPV plans to construct dedicated freight lines along the eastern (Ludhiana to Dankuni) and western parts (Mumbai to Dadri/Tughlakabad) of India.‖ Government of India: Union Budget and Economic Survey website.2 billion).pdf. http://indiabudget. which is responsible for implementing the DFC project.3 billion (INR 496. Dedicated Freight Corridor: • The Dedicated Freight Corridor Corporation of India Limited is a special purpose vehicle (SPV) set up under the administrative control of the Ministry of Railways. The funds for the project will be arranged through internal generation.287 kms.in/es200809/chapt2009/chap97. domestic/external borrowing and multilateral agencies. accessed 24 January 2010 • • • 15 . Construction work for the project has been initiated and it is scheduled for completion in 2016–17.POLICY AND REGULATORY FRAMEWORK Railways November 2010 Government initiatives: the Dedicated Freight Corridor The Indian Railways has initiated its most ambitious project —DFCs — to augment its capacity and enhance the quality of its services.

The issue of MSTs under this scheme commenced in1 August 2009. who have a monthly income of less than or equal to US$ 31.500). Guwahati and Haldia under the JV/PPP mode.2 (INR 1. This is expected to help the Indian Railways meet its economy’s transportation requirements. 16 . proposed to set up five wagon factories in Secunderabad.5 (INR 25) for people working in the unorganised sector. Wagon Investment Scheme • The Indian Railways has launched its Wagon Investment Scheme in 2005 to offer freight rebates and supply a guaranteed number of rakes for a period of 7 to 15 years for different types of wagons. announced Izzat Scheme of uniformly priced monthly seasons tickets (MSTs) costing US$ 0. Bhubaneshwar/Kalahandi. Izzat Scheme • The Ministry of Railways in its Budget 2009–10. in its Budget 2010–11.POLICY AND REGULATORY FRAMEWORK Railways November 2010 Government initiatives: other measures … (1/2) Freight incentive schemes • The Indian Railways offers upgrades and frequent traveller schemes to commuters to encourage them to travel by rail. • The Ministry of Railways has also. Barddhaman.

in/es2008-09/chapt2009/chap97. Source: ―Railways Economic Survey 2008-09 and 2009-10.‖ Government of India: Union Budget and Economic Survey website.911 locations (with about 6. a train-protection warning system and a special railway safety fund have been initiated for passengers’ security. Passenger facilities and catering services have also been considerably improved.POLICY AND REGULATORY FRAMEWORK Railways November 2010 Government initiatives: other measures … (2/2) Key modernisation initiatives • The very small aperture terminal (VSAT) hub system (a two-way satellite ground station) has been installed to ensure rail connectivity in remote areas. the Ministry of Railways introduced a new catering policy. good quality and affordable food to commuters by adopting the best trade and hospitality industry practices. • A modern signalling system. which aims to provide hygienic.nic. • The Indian Railway Catering and Tourism Corporation has been set up to provide catering services.239 counters across the country). 426 stations have already been modernised. economy hotels and food plazas at major stations. accessed 11 March 2010 • • • 17 .pdf. the Catering Policy 2010. e-ticketing and unreserved ticketing services (UTS) have been introduced to facilitate faster and flexible issue of online and unreserved tickets. Integrated security systems have been implemented in trains and at railway premises. • As of November 2009. • Of the 594 stations identified for the upgrade in passenger amenities through the Model Station Scheme. Automatic ticket-vending machines have been installed at 375 locations. http://indiabudget. UTS were available at 2. • In July 2010.

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 18 .

900 255.in/pdf/Inv_Projection.5700 20. Planning Commission website.‖ Secretariat for Infrastructure.820 138. the investment in the Indian Railways in the Eleventh Five Year Plan is expected to be about US$ 54.5 billion. accessed 26 January 2010 19 .010 15.9 billion in the Tenth Plan.979.090 185.780 123.660 21.670 37.860 85.910 2.000 271.710 110. as compared to US$ 24.040 53.618.290 20.060 160.310 603.740 16.530 17. Projected investment in the Indian Railways during the Eleventh Plan 2007–08 Rolling stock Capacity augmentation Safety and other works Investment in PSUs DFCs Metro rail projects Total (INR million) Total (US$ million) 67.250 10.16 2009–2010 89.290 588.060 250.460 48.550 65.543.250 67.700 951.pdf.820 342.780 495.160 62.250 7.infrastructure.534.570 767.940 59.930 12.010 11.290 93.640 8.INVESTMENTS Railways November 2010 Investments According to the Planning Commission’s estimates.310 42.37 Total Eleventh Plan 457. www.010 185.581.70 2010–11 103.317.430 409.87 2011–12 119.130.970 18.33 Source: ―Projections of investment in Infrastructure during the Eleventh Plan.20 2008–09 77.350 21.gov.080 54.160 142.

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 20 .

each of which is divided into 68 divisions. The Indian Railways is divided into 16 zonal offices. 21 .POLICY AND REGULATORY FRAMEWORK Railways November 2010 Regulatory framework • • • The GoI controls the country’s railways sector through the Ministry of Railways. The Railway Board administers the Indian Railways’ operations and project management functions.

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 22 .

Chennai.pdf.nic.OPPORTUNITIES Railways November 2010 Opportunities … (1/2) • High demand for metro trains • • The GoI has introduced a number of metro rail projects to improve connectivity within cities to meet the rapid increase in the demand for urban mass transportation systems in the country. accessed 17 August 2010. Provision of rail connectivity to special economic zones • • Sources: ―Budget speech. The GoI is planning to enable rail and port connectivity to enhance the competitiveness of SEZs. As of 31 March 2010. accessed 12 November 2010 23 . http://indiabudget. ―Fact sheet on Special Economic Zones. Significant investments in infrastructure proposed by the Government • • Funds worth US$ 3. Infrastructure and Communications.2 billion (INR 9. 363 SEZs had been notified and the Board of Approvals had granted formal approvals to 577 SEZs in the country. the NCR and other cities such as Bengaluru. As of 27 August 2010.in/indianrailways/directorate/finance_budget/budget1011/RlyBudget_Eng_10-11.pdf.6 billion). as compared to the estimates of 2009–2010. http://sezindia.in.nic.20 billion (INR10.gov. Mumbai and Kolkata was US$ 14.0 billion) have been announced for metro projects in the Budget 2010–11.52 billion) have been allotted to the Indian Railways in the BE of 2010–11.‖ Ministry of Railways website. http://www.7 billion (INR 705. funds worth US$ 0. thereby creating avenues for the growth for companies engaged in the manufacture of wagons and coaches and the construction of bridges and stations.‖ Union Budget and Economic Survey website.5 billion). indicating a rise of about US$ 0.5 billion (INR 167. the total cost incurred on metro projects in Delhi.‖ SEZs in India website. accessed 17 August 2010.indianrailways. The GoI has planned substantial investments in the Indian Railways to modernise India’s rail infrastructure.in/es2009-10/chapt2010/chapter10. ―Energy. The GoI also foresees tremendous potential in joint ventures (JVs) and strategic alliances for linking SEZs to railheads and ports. Furthermore.

The GoI plans to set up new passenger terminals in the metros to meet the increasing requirements of passenger traffic and the ever-growing demand for trains. http://www. cement. The rise in the freight business of the Indian Railways (which currently accounts for about 70 per cent of its overall revenues) is directly proportionate to the growth in the demand for commodities in India. through alliances with private sector freight operators.gov. Freight traffic has increased at a CAGR of 8. the Indian Railways has announced its plans to enhance its presence in the bulk traffic segments and container cargo by attracting new commodities including fly ash.1 per cent is expected to be contributed by the private sector.in/DEPTTS/planning/Whitepaper/White%20Paper_Eng_SUBMITTED%20To%20Parliament. Furthermore.. operate and transfer (BOT)-annuity contract package. including coal.‖ Ministry of Railways website. • New projects in the pipeline • • • Increase in freight traffic • Sources: ―Budget speech. food grains and iron ore.pdf. automobiles. Furthermore. The DFC project offers significant potential for PPPs in the form of a build. as compared to a target of 50 world-class stations proposed in the 2009–2010 Budget.1 per cent between 2004–05 and 2009–2010 in the country. December 2009.indianrailways. ―White paper on Indian Railways. the development of Multi-Modal Logistics Parks (MMLP) and rail-side warehouses and the construction of railway lines.8 billion (INR 2. investments in the Indian Railways during the Eleventh Plan are likely to be about US$ 41. http://www.indianrailways. over bridges have also opened up significant investment opportunities for private players.OPPORTUNITIES Railways November 2010 Opportunities … (2/2) • Increased private sector participation • • According to the Planning Commission’s revised estimates. the Ministry of Railways has identified 10 additional stations that are to be converted into world-class stations. accessed 17 August 2010.008 billion).gov. accessed 17 August 2010 24 . of which 4. etc. In the Union Budget 2010–11. The GoI is also setting up a new factory at the Kanchrapara-Halisahar railway complex to manufacture Electric Multiple Unit (EMU)/Mainline Electric Multiple Unit (MEMU)/Metro coaches.in/indianrailways/directorate/finance_budget/budget1011/RlyBudget_Eng_10-11. Indian Railways website.pdf.

RAILWAYS November 2010 Contents  Advantage India  Market overview  Industry infrastructure  Investments  Policy and regulatory framework  Opportunities  Industry associations 25 .

in Indian Railway Catering and Tourism Corporation Ltd 9th Floor. Parliament Street. New Delhi–110001. New Delhi Website: www. Bank of Baroda Building. 16.gov.indianrailways. Phone: 91 11 23311263/64 Fax: 91 11 23311259 26 .INDUSTRY ASSOCIATIONS Railways November 2010 Industry associations Ministry of Railways Rail Bhavan.

Conversion rate used: US$ 1= INR 48 27 . numbers in the report have been rounded off to the nearest whole number.INDUSTRY ASSOCIATIONS Railways November 2010 Note Wherever applicable.

the content is not to be construed in any manner whatsoever as a substitute for professional advice. Ernst & Young and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Ernst & Young nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation. This presentation is for information purposes only. modified or in any manner communicated to any third party except with the written approval of IBEF. 28 . wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation). All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. and the same has been prepared by Ernst & Young in consultation with IBEF. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Ernst & Young and IBEF’s knowledge and belief.RAILWAYS November 2010 DISCLAIMER India Brand Equity Foundation (―IBEF‖) engaged Ernst & Young India Pvt Ltd to prepare this presentation. The same may not be reproduced.

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