Public Private Partnership in India Public Private Partnership in India Infrastructure Post-Award Contract Management Toolkit Infrastructure Projects Database    
Home | Contact 
India Opportunities
   Public Private Partnerships
Approval Committees
  e-Repository of Concession Agreements
Knowledge Resources
Discussion Papers
PPP Toolkit
Post-Award Contract Management Toolkit
Useful Links



Ministry of Railways (MoR) is the nodal authority for development and maintenance of rail transport. It is involved in formulation of various policies and looks after the overall functioning of the railway system. Indian Railways (IR), overseen by MoR, is a departmental undertaking of the Government of India (GoI), which owns and operates India's rail transport.

Market Size

IR is World’s third largest rail network, under a single management, operating over a route length of 65,436 km. IR runs 12,617 trains to carry over 23 million passengers per day connecting more than 7,172 stations. IR carries more than one billion tonnes of freight a year, connecting ports and mines to industrial clusters. It runs more than 7,421 freight trains carrying about 3 million tonnes of freight every day. IR is the world's seventh largest employer, by number of employees, with over 1.3 million employees (as at the end of year 2013).  In 2014–2015, IR had revenues of USD17 billion from freight and USD6.4 billion from passenger tickets, implying a CAGR of 7.1 per cent for the period FY07-14. It is expected that Indian Railway will touch the revenue of USD44.5 billion by 2020.

Freight business for IRs is supported by nine commodities and it remains the major revenue earning segment for the railways, accounting for 67 per cent of total revenues in FY14, followed by the passenger segment, which accounts for 27 per cent.

The total number of passengers during FY14 reached 8535 million compared with 8602 million during 2012–13. Passenger volumes would expand at a CAGR of 6.6 per cent to 11.7 million by FY17 from 6.2 million in FY07; and reach 15.2 billion by FY20. The annual passenger volumes increased at a CAGR of 4.6 per cent during FY07–14. According to the 12th Five Year Plan (FYP), passenger volumes would expand at a CAGR of 8.3 per cent during FY13–17.

Indian Railways carried 1,050 million tonnes of revenue earning freight traffic in FY14, a 4 per cent increase from 1,010 million tonnes in FY13. Freight traffic is expected to expand at a CAGR of 6.5 per cent by FY17 from FY07. The Indian Railway estimates originating loading for freight business segment would increase to 2,165 MT by FY20. (Source: IBEF)

Key Initiatives

MoR has been investing heavily to ensure growth and development for Indian Railways. Some of the key initiatives include:

- Dedicated Freight Corridors: Dedicated Freight Corridor Corporation of India Limited (DFCCIL) has been set up as a SPV to undertake planning & development, construction, maintenance and operation of Dedicated Freight lines, along the Eastern and Western parts of India. In the 12th FYP, the GoI allocated USD5 million for a 2,700 km of dedicated rail freght corridor project. The total estimated cost of the project is USD16.7 billion.
- High-Speed Bullet Trains: High Speed Bullet Train on the Mumbai-Ahmedabad corridor is being developed, as part of the Diamond Quadrilateral network of high speed rail, connecting major metros and growth centres of the country.
- Next Generation E-ticketing (NgeT) Application: The newly launched NgeT, developed by the Central Railway Information Centre (CRIS) has enabled substantial increase in online ticket booking capacity, number of enquiries per minute, as well as the capacity to handle concurrent sessions.
- Coal Transportation Projects: Three rail connectivity projects for coal movement in Jharkhand, Odisha, and Chhattisgarh have been put on fast track.
- Launch of Schemes and Policies: MoR has come out with several policies and schemes, such as, R3i policy, R2CI policy, and Automobile Freight Train Operator Scheme, to attract private sector participation, improve rail connectivity and increase its share in automobile transportation. 

Public Private Partnership

In December 2012, the Cabinet approved the new policy of ‘Participative models for rail-connectivity and capacity augmented projects’. The policy addressed private investors’ concerns, which included ownership of the railway line and repayment of investment. The policy led to renewed investor interest in the rail sector. This is also in line with Government’s 12th FYP, wherein, it intends to raise investments worth USD14.8 billion through PPP route. Areas proposed for private investment during this period would include elevated rail corridor in Mumbai, some parts of dedicated freight corridor, freight terminals, redevelopment of stations and power generation/energy saving projects.

Under the PPP route, approval has been granted for seven ports amounting to USD0.7 billion. Development of the major stations to equip them with international level of amenities and services is also being implemented through PPP. In addition, the MoR proposed to set up five wagon factories under the JV/PPP model. For FY14, the Rail budget proposes to mobilize USD1.1 billion through the PPP route.

Investment Environment

The High Level Committee on Infrastructure Financing projects an investment of Rs. 3.4 lakhs crores, of which, private sector’s share is expected to be 13 per cent. MoR has also proposed development of 50 world-class stations in PPP mode to improve and enhance rail infrastructure in the country.

The Indian Railways has attracted increasing foreign investments through strategic alliances with various countries over the last few years. Subsidiaries of foreign companies are being set up to cater to the huge demand offered by IR. Since FY08, the cumulative FDI inflows into the sector has increased five-fold. From April 2000 to November 2014, FDI in Railways related components stood at USD634.1 million.

Policy Environment


- Cabinet approved a new policy of ‘participative models for rail-connectivity and capacity augmented projects’ in 2012. The policy provides for supplementing government’s investment in rail infrastructure projects by private capital flows through following models: non-government railway; joint venture with equity participation by railways; capacity augmentation through funding by customers; capacity augmentation – annuity model applicability; and BOT.
- Automobile Freight Train Operator (AFTO) Scheme notified by Indian Railways in March 2013 to increase its share in automobiles transportation. The scheme provides logistic service providers and road transporters an opportunity to introduce their own special wagons to run on the railways’ network and avail of freight rebates in return.
- FDI in the railway system is allowed under the automatic route at 100 per cent.
- Indian Railways launched the Wagon Investment Scheme in 2005 to offer freight rebates and supply a guaranteed number of rakes for a period of seven to fifteen years for different types of wagons.
- The Interim Report of the Debroy Committee Report (2015) has recommended corporatization of the railway board and separation of roles of policy making, regulation and operations suggesting that the Ministry of Railways be only responsible for policymaking. The committee suggested forming an independent regulator for economic regulation and a railway infrastructure company that will own the railway infrastructure, thus de-linking both from the railways.

Growth Potential

Government has taken up an accelerated program of investment in building rail infrastructure in country. This includes several initiatives, such as, DFCs that can parallel the golden quadrilateral, along with associated industrial corridors, growing metro projects, etc. The following planned actions point to the growth potential of the sector:


- Over the next five years, IR envisages an investment of approximately USD143 billion;
- The size of the plan budget has gone up by 52 per cent from USD10.9 billion in 2014-15 to USD16.7 billion in 2015-16;
- Investments expected in metro rail networks in India: USD42 billion by 2020;
- The freight traffic is expected to reach 1,405 million tonnes by FY17 and 2,165 million tonnes by FY20, indicating a CAGR of 10.2 per cent over FY14–17;
- Government is implementing projects such as the Western and Eastern Freight Corridor, Chennai-Bengaluru Industrial Corridor, Amritsar-Delhi-Kolkata Industrial Corridor, Mumbai Elevated Rail Corridor and High Speed Corridor;
  Railways have launched new MCAs recently for many of the participative models and have also issued guidelines for the same. Projects for rail connectivity to many ports and mines are being developed under participative models;
  1,000 MW solar plants are to be set up by the developers on Railway/private land and on rooftop of Railway buildings at their own cost with subsidy/viability gap funding support of Ministry of Non- Renewable Energy in next five years.
  Railways in partnership with the concerned ports is planning rail connectivity to Nargol, Chharra, Dighi, Rewas and Tuna.

(This sector profile has been compiled as on May 2015. Information has been collected from various sources such as Indian Brand Equity Foundation (IBEF), Ministry of Railways, Twelfth Five Year Plan, Second Report of the High Level Committee on Financing Infrastructure and Interim Report of the Debroy Committee Report. For detailed information, users may refer to the website of Ministry of Railways,

 Copyright Dept of Economic Affairs, Ministry of Finance, Govt of India Website maintained by PPP Cell, DEA