Budget 2026–27: India to Build New Dedicated Freight Corridor Linking Dankuni and Surat

The government will develop a new dedicated freight corridor connecting Dankuni in eastern India to Surat in the west, as part of a wider push to make cargo movement cleaner, faster, and more cost-efficient, Finance Minister Nirmala Sitharaman said while presenting the Union Budget for 2026–27.

The proposed corridor aims to shift a larger share of freight to more sustainable transport modes, easing pressure on congested road and rail networks and lowering logistics costs for industry. Sitharaman said the corridor would complement ongoing investments in rail, inland waterways, and coastal shipping to create a more integrated freight transport ecosystem.

The announcement aims to improve supply chain efficiency amid rising industrial output and growing demand across the manufacturing, mining, and infrastructure sectors. Dedicated freight corridors are critical to separating passenger and cargo traffic, aimed at improving reliability and reducing transit times.

Alongside the new corridor, the government will operationalise 20 new national waterways over the next five years, starting with National Waterway-5 in Odisha, which will link mineral-rich areas such as Talcher and Angul with industrial hubs including Kalinganagar and ports such as Paradeep and Ghamra.

To support inland waterways, the FM said regional training institutes will be established as centres of excellence to develop skilled manpower for water-based transport, benefiting youth across the corridor regions. The government will also establish ship-repair ecosystems in Varanasi and Patna to support inland waterway operations.

In a further push to encourage modal shift, the budget proposes a coastal cargo promotion scheme to increase the share of inland waterways and coastal shipping in freight movement from 6 percent to 12 percent by 2047.

Industry has long flagged high logistics costs as a constraint on increasing India’s manufacturing competitiveness. By expanding dedicated freight corridors alongside waterways and coastal shipping, the government is aiming for a sharper focus on efficiency and sustainability, rather than capacity expansion alone.

The freight corridor initiative forms part of the government’s broader infrastructure strategy, backed by a proposed increase in public capital expenditure to Rs. 12.2 lakh crore in FY27, as India seeks to sustain economic growth while reducing the carbon footprint of its transport systems.