The Prime Minister’s Office (PMO) has given stiff targets to Indian Railways to augment the freight business of the carrier, including redirecting 20 million tonne (MT) of additional cargo from road to rail by the end of financial year 2017-18. The railways’ share of the overall cargo movement in the country is a little over 30% at present and though freight loading has shown uptrend in the recent past, as reported by FE, the national carrier has been losing traffic to roads. The railways has been asked to benchmark rail tariff with that for roads and revise policies accordingly.
Post implementation of the Goods and Services Tax (GST), the tax incidence on freight charges will go up from 4.5% to 5%. However, “it will not affect the railways’ freight charges,” according to a Railway Board member who did not want to be named. The member, however, added container operators are working to cope with 12% tax under GST applicable for movement by railways compared with 5% applicable for road transport.
In financial year 2016-17, freight loading traffic of the railways was around 1,107 MT compared with a revised target (RE) of 1,094 MT, and 1,104 MT achieved in the previous year. The marginal increase in loading was despite losing 60 MT of coal loading due to low demand from power houses and reduction in imported coal traffic. The revenue from freight during the last financial year was around Rs 1,07,000 crore compared with an RE of Rs 99,555 crore and Rs 1,04,000 crore in 2015-16. The Indian Railways’ freight-loading target for 2017-18 is 1,165 MT.
The PMO has also directed the ministry of railways to commission 200 km of dedicated freight corridor (DFC) by March 2018 and start operations of 10 multi-modal logistics parks and 15 modernised goods sheds during the same period. As reported by FE earlier, Dedicated Freight Corridor Corporation of India (DFCCIL) — the special purpose vehicle of the railways — has already committed to operationalise 190-km double track route between Ateli and Phulera on the Western DFC by March 2018. Another 500-600 km is expected to be commissioned during financial year 2018-19. DFCCIL is developing six DFCs across the country, of which the Eastern DFC and the Western DFC have been taken up on priority basis. The total track length of these two DFCs is around 3,300 km. While surveys of the other four DFCs are over, work is yet to start.
The PMO has also asked the carrier to increase its cargo traffic from ports by at least 5% compared with financial year 2016-17. The railways during the last financial year waived port congestion charges of 10%, busy season discount of 15% and dual freight policy for iron ore, and empty wagon flow discounts ranging from 10-30% were introduced.
To increase the loading capacity of the railways, the carrier has been directed to prioritise pan-India roll out of double-stacked dwarf containers. As per plan, new DFCs will run dwarf containers which will be 1.5 km long in length. These rakes will be able to carry 13,000 tonne of load compared with 5,000 tonne carried by single-stack rakes.
The railways will also be accessing its earnings from non-PSU operations and chalk out a road map to boost revenue from these segments.