Indian Railways needs to diversify its freight basket beyond traditional bulk commodities such as coal, iron ore and cement and tap into faster-growing segments like automobiles, FMCG, e-commerce and fly ash, a parliamentary panel has said. The committee has also recommended an annual review of freight rates, which have remained largely unchanged since 2018, taking into account commodity-wise competitiveness, market demand and operating costs. It said rationalising rates would help railways compete more effectively with road transport and encourage a shift towards rail.
The push for diversification comes as freight earnings remain heavily dependent on a narrow set of commodities. In FY26, coal accounted for more than 49% of the total freight loading. The panel has called for zone-specific strategies to attract freight in regions with limited mineral movement and industrial activity, including targeted discounts for commodities that could shift from road to rail.
“The committee urge Indian railways to conduct a comprehensive analysis of its existing freight portfolio, identify commodities with low rail modal share but high growth potential, assess their specific logistical requirements and address operational bottlenecks that hinder their movement by rail,” the report said.
Modernising Infrastructure
Even though the panel noted that freight loading and revenue generation on the dedicated freight corridor (DFC) network have witnessed a significant uptrend in recent years, there is considerable scope of further improvement. This includes elimination of level crossings, deployment of 100 kmph capable wagons and implementation of the kavach safety system. Further, the committee recommended railways to prioritise the development of new feeder routes and undertake capacity augmentation of existing feeder routes to ensure seamless connectivity between major industrial hubs and the DFC network. So far, around 2,741 km of has been commissioned, with freight trains on the DFC network averaging 37 kmph in FY25, compared with 23.8 kmph across the conventional railway network.
Crew availability has emerged as another issue. The panel flagged shortages of operating crew on DFCs stating that the lack of staff could undermine the benefits of dedicated high-capacity freight infrastructure. In its response, the railways said recruitment processes for assistant loco pilots and goods train managers are under way.
Additionally, the panel took note of the three additional freight corridors that are under the Railway Board review. Given the high capital requirements of DFCs, the panel has urged Railways to make future projects more attractive to private investors, offering “commercially viable and attractive terms”.
Meanwhile, the panel stressed that higher freight earnings are important not only to fund railway modernisation but also to keep passenger fares affordable. It said that freight revenue has risen consistently over the past decade, except during the Covid-19 period, but growth has been uneven across zones, with some zones recording only marginal increases.