Indian Railways opens carriage design to private industry in latest reform push | Today’s news
Indian Railways has opened the door to private companies to design commodity-specific freight cars, the centerpiece of eight new reform measures unveiled on Tuesday as the government seeks to make rail freight more competitive and increase its share of India’s freight traffic.
The latest measures – numbered 10 to 17 under the government’s “52 reforms in 52 weeks” program – include wagon construction, container operations, construction contracting and project implementation.
Railway Minister Ashwini Vaishnaw said the reforms are aimed at ease of doing business while helping railways capture a greater share of freight traffic, which currently accounts for about 27% of the country’s total cargo movement.
The reforms are part of what Prime Minister Narendra Modi has described as the “Reforms Express”, a broader effort to drive structural change across Indian railways by 2026.
“Railways are already the second largest freight carrier in the world, higher than the US and Russia. Our aim is to increase the share of railways in the transportation of goods as this will help reduce carbon emissions and lower logistics costs faster,” Vaishnaw said.
Responsibility shifts
The biggest policy change is the new wagon design framework, which shifts responsibility for freight wagon design from railroads to private industry. Under this policy, any designer or manufacturer can propose a new car design. After evaluation by the Research Designs and Standards Organization (RDSO), the design can proceed to the prototype stage. Once the prototype is tested, RDSO approves one test rake. After operational tests and safety certification, the car can be included in the railway network.
“This will enable special design of wagons for the specific needs of the industry. This will also create a new structure for the wagon design and manufacturing industry. Currently, the entire industry is limited in its scope for innovation,” the railway ministry said in a statement.
The policy also allows oil companies and other industries to design and introduce tank cars tailored to their operational requirements. Currently, oil tankers are exclusively owned by the Indian Railways with limited flexibility for the industry to develop new designs.
Greater use of containers
The reform package also aims to increase the use of containers for commodities, including fertiliser, fly ash, food grains, flour and pulses, by promoting specially designed containers suitable for each type of cargo. For fertilisers, the railways has revised the freight structure on a per km, per tonne basis with a flat taper and flat rate structure. Freight was previously decided through a classification system based on commodity groups, weight and distance, and the freight table had 50 boards.
In the container business, railways have introduced a uniform nationwide container train operator (CTO) license, which replaces route-specific authorizations. Operators will pay a uniform registration fee of ₹25 crore for access to the entire railway network and the license can be renewed without any additional charges after 20 years of successful operation.
Separately, Indian Railways announced reforms to the construction sector aimed at tightening the eligibility of contractors while streamlining project implementation. Contractors will be required to provide a 10% performance bond and will only be eligible to bid if the value of the pending litigation does not exceed 50% of their net worth. No performance security was charged at the beginning of the contract. Contractor’s All Risk Insurance and Professional Indemnity Insurance will become mandatory, while land acquisition approvals will be integrated through the Rail Bhoomi platform with handover of land in clearly defined incremental phases.
The Railways has also announced a policy for skilling artisans working on railway projects and infrastructure works.
