Budget puts East–West freight corridor on fast track as rail capex hits a high

A new dedicated freight corridor (DFC) will be established by the Indian Railways that would connect Dankuni, West Bengal in the East to Surat, Gujarat in the West to promote environmentally sustainable movement of cargo, finance minister Nirmal Sitharaman announced in her budget speech on Sunday.

At a post-budget press conference, railways minister Ashwini Vaishnaw said the new east-west DFC will be 2,052 km long, and work on it would be completed during the term of the current government. This corridor will provide connections with the western freight corridor, providing seamless movement of freight to all parts of the country.

The new DFC will complement the existing 1,337 km eastern and 1,506 km western DFCs. About 1,404 km of the western corridor is operational, while the remaining 102 km from Vaitarna, Maharashtra to the Jawaharlal Nehru Port Trust (JNPT) in Navi Mumbai is scheduled to be commissioned soon. The eastern DFC is fully operational.

These corridors have boosted freight speeds and eased congestion on passenger routes. They have also helped take the railways’ share of total freight movement up to 27% in 2025 from about 25% in 2020, according to the ministry of railways. This is a fall from the more than 60% share seen in the 1990s. The National Rail Plan targets to hit 45% share of freight movement by 2030.

The Indian Railways has been exploring three new DFCs to extend the high-speed cargo network deeper into southern, eastern, and central India, building on the success of the two operational lines to create a continuous nationwide logistics loop, two people aware of the development said.

Detailed project reports (DPRs) have been completed on all three new corridors by the railways, while the budget has announced the establishment of one. The other two DFCs would be pursued later, one of the persons cited above said.

The two new DFCs under consideration are a 1,115 km East Coast Corridor (Kharagpur–Vijayawada); and a 975 km North–South Sub-Corridor (Vijayawada–Nagpur–Itarsi).

Mint had reported on 12 December that at least one corridor will be selected first based on technical feasibility, traffic potential, and funding availability, and that the proposal may be included in the upcoming Union budget with token allocations for FY27.

The railways push comes as India’s logistics market expands. Mordor Intelligence, a global market research consulting firm, expects the country’s freight and logistics market size to grow from around $350 billion in 2025 to about $550 billion by 2030.

Pointing out that the budget has increased the railways’ capex outlay by 10%, Manish Aggarwal, partner at Deloitte India, said the seven dedicated rail corridors, the new DFC, and the increased outlay “would help act as catalyst for tier-II and tier-III cities, which are going to be important wheels for our Viksit Bharat ambitions”.

Corridors for bullet trains

Apart from the new DFC, the budget has also proposed to develop seven high-speed rail corridors — for bullet trains — between cities to promote environmentally sustainable passenger systems. These corridors are Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, and Varanasi-Siliguri.

During the media briefing, minister Vaishnaw said the seven corridors announced in the budget will create a South High Speed Diamond, which will enable faster movement between the three key cities of Chennai, Bengaluru and Hyderabad.

“Work on all the seven high-speed rail corridors will be started simultaneously and work would be completed at a faster pace due to the leanings received during construction of the Mumbai-Ahmedabad high speed corridor,” Vaishnaw said.

“The total investment in these 4,000 km long corridors would be to the tune of ₹16 trillion, and the government would soon work (three to four months) out a financing and funding plan for these projects,” the minister added.

More power to rail

The budgetary support for the Indian Railways has hit a new high in 2026-27 as the government prepares an ambitious plan to upgrade the national transporter with faster, modern trains and better safety systems.

According to budget documents, the capital expenditure for railways has risen by 10.25% next year to ₹2.78 trillion, which would be the highest allocation for the Indian Railways in any budget.

Mint wrote on 19 November that the national transporter’s capex allocation would rise to ₹2.76 trillion as the government wants to push for its modernisation.

Indian Railways operates with a two-pronged financial structure: its capex is primarily funded by the Union budget, while its operational expenses are mostly met through internal revenues.

The increased capex comes on the heels of unusually rapid spending this year, with the railways exhausting more than 80% of its 2025-26 budget in the first nine months, its highest utilisation on record, underscoring the pace at which large projects have moved into execution.

Railway safety measures

Vaishnaw also said during the media briefing on Sunday that rail safety has been the prime focus of the government and in this regard, a sum of ₹1.2 trillion has been kept for FY27 for track renewals, kavach installations, signalling recast and coach and loco upgradation.

The safety-related investments by this government has brought down the number of accidents to just 12 from a level of 171 during UPA time between 2004 and 2014, the minister said.