The big bang retail plans unfolding in the country mean a lot of ancillary activities, logistics support being one of the biggest. And now, Indian Railways is eyeing a large slice of this pie. The railway ministry has recently invited expressions of interest (EoIs) for its ambitious agri-retailing project. The ministry has given Rail Vikas Nigam Ltd the responsibility of floating the tenders for EoIs from corporate houses and cooperative institutions. Sources said a clearer picture of interested parties would emerge once the EoIs were submitted.
The ministry has been in talks with leading retail companies for the past year for using a part of its surplus land for warehousing and cold storage facilities for agricultural products. The railways is also keen to provide them back-end logistics.
Railway minister Laloo Prasad, who felt that along with providing more revenue to the railways it would also help farmers take their products to the markets more easily, announced the plan. It was also reflected in Railway Budget 2007-08, wherein the minister announced ?development of agro retail outlets and supply chain? using the public-private partnership route.
Rail Bhavan sources said retail biggies such as Reliance, Tatas, Bharti, Future group and Adanis have shown considerable interest in the initial plans. The main idea behind the project is to utilise surplus land available with the ministry. The railways is one of the largest landowners in the country and has a total 4.23 lakh hectare of surplus land, of which 43,000 hectare lies vacant. The railways propose to provide retail companies with land for national, regional and rural hubs.
The companies would pool their funds to set up infrastructure, including warehouses, cold storages and container train stations. According to initial discussions, the national hubs would be created at the four metros and select non-metros. They would also house a special freight station with dedicated terminals for every product. While they would provide the infrastructure and funding, the railways would use its land as equity.
For the railways, however, it would also mean a steady flow of traffic, as the deal would ensure that the companies would give railways a cargo guarantee and the railways would provide back-end logistics support in return. While the supply chain would consist of a multi-modal transport system, the railways would be primarily involved in transporting goods at a distance of over 100 km.
Officials said the railways would provide break vans in passenger trains for carrying goods 100-500 km. However, for distances over 500 km, the ministry is also willing to provide parcel and break vans as well as container trains, he added. In return for this guaranteed traffic, the railways would give the companies freight rates lower than existing market rates.
The railways is also considering the retailers? proposal to create a refrigerated rail link between the agri-hubs for transporting perishable products. The plan is also significant and will bring in a steady stream of revenue for the railways given that in India, about 60% of the organised retail trade is likely to be centred around the marketing of perishable food items, mainly vegetables and fruits.