Indian Railways eyes bigger share of India Auto Inc's business

The Indian Railways states it has emerged as the most preferred mode of transportation for automobiles, given low cost of transportation, faster service, reliability and safety offered. In FY2017-18, around 29 million vehicles were produced in the country, registering a year-on-year growth of 14.78 percent.

During 2017-18, vehicle loading from the Indian OEMs with the Railways rose by 16 percent and earning from automobile traffic increased by 18 percent as compared to 2016-17.

Given the current low car penetration, rising prosperity and the increasing affordability of private vehicles, the passenger vehicle industry which sold nearly 3.3 million units in FY2018, is billed to grow even faster in India. With automakers targeting Tier 3 and Tier towns in far-flung corners of the country to draw new buyers into their fold, they are looking for speedy, smooth and cost-efficient transportation. Now, Indian Railways, which operates its services to all parts of India, is aiming to grab a significant portion of the automobile traffic on the back of its recent initiatives .

According to Mohd Jamhsed, member traffic, Indian Railways,  “FY2017-18 has witnessed a paradigm shift in the marketing efforts of the Indian Railways to attract automobile traffic and enhance our freight basket. Especially in the second half of FY2017-18, we decided to liberalise the Automobile Freight Train Operator (AFTO) policy to encourage more private investment in special wagons, procurement of our own BCACBM (high-capacity railway wagons) and NMG wagons. In Apri, 2018, we have taken two game-changing decisions to allow handling of automobiles from all container terminals and to allow loading automobile and auto spares in privately owned wagons in different directions for optimal utilisation of stock”.

The Indian Railways states it is working closely with the automobile industry to develop policies, which are mutually beneficial to the industry as well as the railways. It also already held a number of meetings with apex industry body SIAM, leading vehicle manufacturers and industry stakeholders.

Some of the measures to draw more business from India Auto Inc include:

- The AFTO policy has been liberalised, under which the registration fees for the AFTO scheme has been reduced from Rs 5 crore to Rs 3 crore, and minimum procurement of three rakes relaxed to one rake.

- Around 28 routes have been notified for operation of BCACBM rakes.

- Auto Hubs at Walajabad (Southern Railway) and Farukhnagar (Northern Railway) are now functional along with work underway for upgradation of facilities. Additionally, general managers of all Zonal Railways have been asked to identify terminals to be developed as Rail Auto Hubs.

- Conversion of 17 additional NMG rakes has been approved, out of which four rakes have already been inducted.

- 10 BCACBM rakes have been included in the Railways' RSP for 2018-19.

- The agreement for licensing of commercial plots at Detroj of Ahmedabad division has been duly agreed by Maruti Suzuki India and finalised and loading begun in March 2018. 

Efforts are already paying off
the positive results of the initiatives are now being witnessed. In 2017-18, the loading from automobiles traffic increased by 16 percent and earning from automobile traffic increased by 18 percent as compared to FY2016-17.

In April, 2018 Indian Railways liberalised the AFTO policy, earlier, the transportation of automobile and auto spare by AFTOs was permitted only in one direction. With the liberalisation the AFTOs are now able to utilise their rakes for loading in different directions and will be able to optimise the utilisation of their rakes.

The loading of automobile loading was permitted only from auto hubs, Private Freight Terminals’ (PFT) and Railway good sheds with automobile handling facility.  This condition had severely restricted automobile loading on account of limited availability and capacity of such terminals. It has been decided that the automobile loading/unloading shall be permitted from all Inland Container Depots (ICDs), Container terminals managed by Container Train Operators. This shall result in availability of additional 86 locations in addition to the earlier auto hubs, PFTs and Railway good shed with automobile handling facility.