Freight Corridors Open Up Slivers of Growth
A freight corridor is a high-speed, large capacity, and prioritized railway corridor meant for transportation of goods and commodities (freight) across the length and breadth of the country. The growth of the Indian economy led to a burgeoning demand for freight corridors. As the need for a dedicated freight corridor arose, in December 2006, an agreement was signed between India and Japan for the development of two exclusive rail freight corridors which is also known as the Dedicated Freight Corridor (DFC) as a part of economic cooperation for industry and trade. The DFC is a network of “broad gauge freight railway” that makes the freight service faster and efficient.
The organisation which is responsible for undertaking planning, development, and mobilisation of financial resources and construction, maintenance, and operation of the “Dedicated Freight Corridors” is the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) under the ownership of Indian Railways, Ministry of Railways, Government of India. Recently, the Prime Minister of India inaugurated a 351 km section of the Eastern Dedicated Freight Corridor (EDFC) and an Operation Control Centre (OCC) between Khurja and Bhaupur in Uttar Pradesh. EDFC is an 1,839 km from project billed as the largest rail infrastructure being built in independent India and has been in the making since 2006.
First 2 DFCs , Western Dedicated Freight Corridor (WDFC), from Dadri in Uttar Pradesh to Jawaharlal Nehru Port in Mumbai and Eastern Dedicated Freight Corridor (EDFC), Ludhiana in Punjab to Dakuni in West Bengal, will decongest railway network by moving 70% of India’s goods train to these two corridors. Most of the dedicated freight corridor tracks, over 90 per cent, will be operational in next one year by June, 2023.
The EDFC route has coal mines, thermal power plants, and industrial cities. Feeder routes are also being made for these. This route covers Punjab, Haryana, Uttar Pradesh, Bihar, Jharkhand and West Bengal. EDFC is receiving most of its funding from the World Bank. The 351-km-long ‘New Bhaupur-New Khurja section” will decongest the Delhi-Kanpur main line and accelerate the speed of freight trains from 25kmph to 75 kmph. The Western Dedicated Freight Corridor (WDFC) is 1500 km long and covers the states of Haryana, Rajasthan, Gujarat, Maharashtra, and Uttar Pradesh. The construction of this route is being funded by Japan International Cooperation Agency. The connecting link between the western and eastern arm is under construction between Dadri and Khurja. The industrial corridor of Delhi-Mumbai and Amritsar-Kolkata are also being developed around both these DFCs. If the government is able to meet its target, 2750 kilometres of route will be ready for use. Presently, there are a hundred trains running on WDFC, and sixty on EDFC. According to Ravindra Kumar Jain, Managing Director at Dedicated Freight Corridor Corporation Limited, freight movement from ports in Gujarat to Delhi has already been cut down by a day. The biggest gainer by June next year will be food coal and food grain movement on EDFC and Export-Import Traffic on WDFC as both will get a boost. The initial cost of these freight corridors was planned at Rs 21,140 crores in 2006. This escalated to Rs 1.24 lakh crores in 2021. In January last year, Prime Minister Narendra Modi had dedicated the 306 km Rewari - Madar section of the freight corridor to the nation.
“Bringing down the logistic costs for our industry is at the core of our strategy to enable ‘Make in India’,” Sitharaman said. “Railways will monetise dedicated freight corridor assets for operations and maintenance, after commissioning.” Freight receipts for FY22 have been pegged at ?1,37,810 crore, as against ?1,24,184 crore expected to come in through loading of goods in FY21. Passenger receipts for FY21 have been revised to ?15,000 crore as against the budget estimate of ?61,000 crore, as passenger train services were suspended for most of the current financial year.
The EDFC and WDFC are two of the six dedicated freight corridors (DFC) that are being implemented. The funding for the remaining four (East-West, North-South, East Coast, and Southern dedicated freight corridor) was implemented in January, 2018. These 6 freight corridors would together make up the Golden Quadrilateral Freight Corridor (GQFC). The Britishers introduced trains to facilitate cargo transport from the heartlands of India to the trading centres they had set up. It was in 1832 that the first proposal for freight railways was made in Madras (now Chennai).
However, DFCs have been plagued by numerous delays and cost overruns. As part of the cost cutting measures, the project is being implemented on the basis of a traffic projection for the ten years from the date of completion. Project funding has come only from the World Bank and JICA. This is because the private sector is unwilling to invest owing to the political uncertainties and procedural and bureaucratic wrangles over project implementation. Also, loans from the World Bank and JICA have come at low interest rates but the terms and conditions attached to these agreements are heavily loaded. Such apprehensions are not unfounded. For the JICA-funded Western DFC (1499km), just two joint ventures have been shortlisted for the civil works contracts, and Japanese firms Mitsui and Sotitz are the lead partners of both consortia. On the World Bank-funded Eastern DFC, the work looks likely to be more evenly split, with Russian, Spanish, Chinese, American and French firms in the fray. But even here concerns have been raised about the limited number of bidders - only 13 companies have been shortlisted, far fewer than expected. India’s thirst for a dedicated freight corridor needs to be quenched. According to some sources, the Ministry of Railways is mulling scrapping the three newly proposed dedicated freight corridors- East-coast, East-West and North-South, and enhancing the capacity of the existing ones instead. This alternative is still being deliberated on as the existing projects continue to get delayed due to land acquisition troubles. The country's existing 64,000km network is extremely congested and there is near unanimity among politicians that the DFC project must move forward. Despite all the limitations in terms of funding and red tapism, the outlook for India’s will to create dedicated freight corridor looks fairly positive.
In terms of impact, dedicated freight corridors aim to bring down the cost of freight transport, by using electrical fuel, longer trains with more capacity. This is going to help Indian industries become more competitive in the world export market. Some other added benefits are increased capacity, decongestion, business generation, and punctuality. The DFC will reform the transportation sector by creating more capacity on trunk routes of Indian railways. Around 70% of the freight trains running on the Indian Railways Network are slated to shift to the freight corridors, leaving the paths open for more passenger trains. Tracks on DFC are designed to carry heavier loads than most of the Indian Railways. It will also generate its own freight business. As all the freight trains move away from Indian Railways network, more passenger trains will be pumped in and since coordination will have to be maintained only between the passenger trains, punctuality will also be ensured. Thus, reduction in logistics cost, higher energy efficiency, faster movement of goods, ease of doing business, employment generation and environmental consciousness justify the need for freight corridors in India.
References
1.Twesh Mishra, 8th June, 2022, Number of trains at freight corridors to rise next year: DFCMD, https://economictimes.indiatimes.com/industry/transportation/railways/number-of-trains-at-freight-corridors-to-rise-next-year-dfc-md/articleshow/92074232.cms
2.ET Bureau, 2nd February, 2021, Budget 2021: Railways looks to monetise dedicated freight corridors, https://economictimes.indiatimes.com/industry/transportation/railways/railways-looks-to-monetise-dedicated-freight-corridors/articleshow/80637802.cms
Pic Courtsey-Uttam Singh
(The views expressed are those of the author and do not represent views of CESCUBE.)
