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  • India has the fourth largest rail freight carrier in the world and has the largest passenger carrier.
  • 1.3 million strong work force in Indian Railways.
  • Indian Railways network spans more than 66030 kms. making it the world’s third largest rail network.
  • Indian railways carried around 8224.12 million passengers in 2014-15 which is about 1.430 million higher than the passengers of the world put together.
  • 100% Foreign Direct Investment (FDI) in the railway infrastructure segment has been allowed recently which has opened up opportunities for participation in infrastructure projects such as high-speed railways, railway lines to and from coal mines and ports, projects relating to electrification, high-speed tracks and suburban corridors.
  • Indian Railways envisages a prospective investment of USD 130.76 billion in the next five years.
  • The sector aims to boost passenger amenities by involving Public Private Partnership (PPP) investments in provision of foot-over bridges, escalators and lifts at all major stations.
  • Last-mile connectivity to boost business activity in and around ports and mines has been proposed through the formation of special purpose vehicle (SPV) companies under the PPP model.
  • Indian Railways aims to involve private equity through individuals, NGOs, trusts, charitable institutions, corporates, etc. to provide passenger amenities such as battery-operated carts to facilitate movement for senior citizens and differently abled, at stations.
  • To strengthen rail connectivity with various ports, Indian Railways has floated SPVs under the PPP mode. Pipavav Rail Corporation Ltd., Bharuch-Dahej Railway Company Ltd., Kutch Railway Company Ltd., Hassan-Mangalore Rail Development Company, Obullavaripalle-Krishnapatnam Railway Company Ltd., and Anugul-Sukinda Railway Company Ltd.  have been established.
  • Three rail connectivity projects namely Gevra Road-Pendra Road new line, Raigarh-Bhupdeopur new line and Jaigarh Port connectivity projects are being implemented through the joint venture route.
  • Eastern Dedicated Freight Corridor of 1840 km length and Western Dedicated Freight Corridor of 1504 km length is under construction as well as many projects are under planning stage.
  • Wifi provided in 100 stations, to be provided in 400 stations more.
  • ​Increasing urbanization coupled with rising incomes (both urban and rural) is driving growth in the passenger segment.  Growing industrialization across the country has increased freight traffic over the last decade.
  • Both passenger and freight traffic volumes have increased steadily in the past five years.  While passenger traffic witnessed a CAGR of 2.6% during 2010-2015, freight traffic has registered a marginally lower CAGR of 4.3% during the same period.
  • The sector runs 22,300 train carrying over 23 million passengers daily and connecting more than 7137 stations.  Indian Railways runs more than 9202 freight trains, carrying about 3 million tonnes of freight every day.
  • The sector total track length is 117996 Km.  It also comprises 68,558 coaches, more than 2,54,006 wagons and 1.3 million employees
  • The long-term strategic plan of the Ministry of Railways is to construct six high-capacity, high-speed dedicated freight corridors along the Golden Quadrilateral and its diagonals.
  • The sector has taken up port connectivity on priority, through the PPP mode of funding in tandem with the Sagar Mala Project of Port Development. Railways will facilitate connectivity to new and upcoming ports through private participation. So far, in principle, approval has been granted for building rail connectivity to the ports of Jaigarh, Dighi, Rewas, Hazira, Tuna, Dholera, Astranga, Chara and Nargol under the Participative Model Policy of the Indian Railways, amounting to USD 615.38 Million.
  • The 2014–15 Union Budget envisages a Diamond Quadrilateral network of high-speed rail, connecting major metros and growth centres of the country.
  • The development of identified stations to international standards with modern facilities and passenger amenities on the lines of newly developed airports, through PPP mode.
  • Private investment in railway logistics is to be encouraged. Indian Railways proposes to modernise its logistics operations by setting up logistic parks that provide for warehousing, packaging, labelling, distribution, door-to-door delivery and consignment tracking in order to achieve better efficiency; mechanisation of loading and unloading will be given top priority.
  • A scheme for private participation in parcel movement will be launched shortly whereby procurement of parcel vans or parcel rakes by private parties will be facilitated.
  • To develop a network of freight terminals, the Policy of Private Freight Terminals on the PPP model is being further refined.
  • A proposal is in place to harness solar energy by utilising rooftop spaces of railway stations, other railway buildings and land, through the PPP mode.
  • During the period of 2012-17, Mass Rapid Transit Systems (MRTS) projects are being planned in Ahmedabad, Bengaluru, Hyderabad, Chandigarh, Chennai, Delhi, Jaipur, Kochi, Kolkata, Mumbai, Patna, Pune, Lucknow and Surat through the PPP model.
  • The share of private investment in MRTS projects is expected to increase from 13% during 2007-12 to 42% during 2012-17.
  • Rail tourism is on the anvil, with emphasis on the introduction of eco-tourism and education tourism in the North-eastern states, the identification of special pilgrim circuits such as the Devi Circuit, the Jyotirling Circuit, the Jain Circuit, the Christian Circuit, the Sufi Circuit, the Sikh Circuit, the Buddhist Circuit and the Temple Circuit. Specially packaged trains for these circuits have been proposed and private participation will be encouraged.

100% FDI under automatic route is permitted for the following:

  • Construction, operation and maintenance of suburban corridor projects through PPP.
  • High speed train projects.
  • Dedicated freight corridors.
  • Railway electrification.
  • Signaling systems.
  • Freight terminals.
  • Passenger terminals.
  • Infrastructure in industrial parks pertaining to railway line/siding including electrified railways lines and connectivities to main railway line.
  • Mass Rapid Transport Systems (MRTS)

Policy on Participative Models for Rail Connectivity & Capacity Augmentation Projects

Indian Railways are operating in the core sector of the economy. To strengthen, modernise and expand the railway network, the investment requirement is huge. Private sector participation would be required for accelerated construction of fixed rail infrastructure. For this purpose, railways has formulated participative investment models for its existing shelf of projects and also for new projects. These models have only general provisions while the specific issues are decided on a case-to-case basis depending on the model of private investment, Ministry of Railways will either grant direct permission or go in for competitive bidding for award of concession. Under this Policy, the following can participate in the development of railway infrastructure:

  • State Governments
  • Local bodies
  • Beneficiary industries
  • Ports
  • Large import and export companies
  • Co-operative Societies and other body corporate
  • Infrastructure and Logistics providers
  • Person of Indian Origin (PIO)
  • Overseas Corporate Bodies (OCB) (After foreign investment promotion board clearance)
  • Foreign Direct Investor (After foreign investment promotion board clearance)

Key Points in the Rail Budget 2015-16:

The Ministry of Railways issued Sectoral Guidelines for permitting domestic/foreign direct investment (FDI) in construction, operation and maintenance in the following identified areas:-

  1. Suburban corridors through PPP
  2. High-speed train projects
  3. Dedicated freight lines
  4. Rolling stock including trains sets and locomotive/coaches manufacturing and maintenance facilities
  5. Railway electrification
  6. Signaling system
  7. Freight terminals
  8. Passenger terminals
  9. Testing facilities and laboratories
  10. Non-conventional sources of energy
  11. Railways technical training institutes
  12. Concessioning of standalone passenger corridors (branch lines, hill railways etc.)
  13. Mechanised laundry
  14. Rolling stock procurement
  15. Bio-toilets
  16. Technological solution for manned and unmanned level crossings
  17. Technological solutions to improve safety and reduce accidents. The guidelines will encourage foreign investors for making investment under ‘Make in India’ programme
  18. Life Insurance Cooperation will make available to the Ministry of Railways/its entities a Financial Assistance with a limit of USD 23.76 billion over the next five years for implementing railway projects
  19. With the objective of cutting energy costs, the railways has signed a bilateral power procurement agreement with the Damodar Valley Corporation (DVC). Under the agreement, railways will buy 50 MW of power from DVC at Auraiya Grid Sub-station facilitated by Railways Energy Management Co. Ltd, a joint venture of the Indian Railways and RITES, a public sector unit of the Ministry of Railways
  20. The Ministry of Railways has sanctioned implementation of Eastern Dedicated Freight Corridor (EDFC) and Western Dedicated Freight Corridor (WDFC) with freight train speeds of maximum 100 Kmph
  21. Open Wi-Fi to be available at 400 railway stations
  22. In Dedicated Freight Corridor 750 kms of civil contracts and 1300 kms of system contracts are targeted in 2015-16 with over 6608 kms of track to be electrified
  23. Wagon-making scheme to be reviewed to make it easier for private investment; speed on nine corridors to be increased from 110-130 to 160-200 kms per hour
  24. Railways to go through transformation in five years; to increase track capacity by 10% to 1.38 lakh kms
  25. Replacement of 17000 more toilets by bio-toilets in 2015-16

For manufacturing activity:

State Incentives:

  • State governments offer additional incentives for industrial projects.  Incentives are in areas such as rebates in land cost, relaxation in stamp duty on the sale or lease of land, power tariff incentives, concessional rates of interest on loans, investment subsidies/tax incentives, backward areas subsidies and special incentive packages for mega projects.

Export Incentives:

  • Various kinds of incentives on exports are available under foreign trade policy.

Area based Incentives:

  • Incentives for units in Special Economic Zones (SEZ) / National Investment & Manufacturing Zones (NIMZ) as specified in respective Acts or setting up of projects in special areas such as the North-east, Jammu & Kashmir, Himachal Pradesh & Uttarakhand.

Tax Incentives R&D Incentives:

  • Industry/private sponsored research programmes: a weighted tax deduction is given under section 35 (2AA) of the Income Tax Act. Weighted deduction of 200% is granted to assesses for any sums paid to a national laboratory, university or institute of technology, or specified persons with a specific direction, provided that the said sum would be used for scientific research within a programme approved by the prescribed authority.
  • Companies engaged in manufacture, having an in-house R&D centre. Weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both capital and revenue expenditure incurred on scientific research and development. (Expenditure on land and buildings are not eligible for deduction).
  • Components manufacturing
  • Infrastructure projects
  • High speed train projects
  • Railway lines to and from coal mines and ports
  • Projects relating to electrification, high-speed tracks and suburban corridors
  • Dedicated freight corridors
  • The re-development of railway stations
  • Power generation and energy-saving projects
  • Freight terminals operations
  • Setting up of wagon, coaches and locomotive units
  • Gauge conversion
  • Network expansion
  • EMD (USA)
  • Bombardier Transportation (Canada)
  • GE (USA)
  • Siemens (Germany)
  • Alstom (France)
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