Indian Railways opens wagon design to private industry in latest reform push

Indian Railways has opened the door for private companies to design commodity-specific freight wagons, the centrepiece of eight new reform measures unveiled on Tuesday as the government seeks to make rail freight more competitive and raise its share of India's cargo movement.

The latest measures—numbered 10 to 17 under the government's "52 reforms in 52 weeks" programme—span wagon design, container operations, construction contracting and project execution.

Railway minister Ashwini Vaishnaw said the reforms are intended to improve ease of doing business while helping Railways capture a larger 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 changes across Indian Railways in 2026.

“Railways is already the second largest freight carrier globally, higher than both US and Russia. Our aim is to raise railways share in freight movement as this will help in reducing carbon emissions and for faster reduction in logistics cost,” Vaishnaw said.

Responsibility shifts

The biggest policy change is a new wagon design framework that shifts responsibility for designing freight wagons from the Railways to private industry. Under the policy, any designer or manufacturer can propose a new wagon design. After evaluation by the Research Designs and Standards Organisation (RDSO), the proposal can proceed to the prototype stage. Once the prototype is tested, RDSO will approve one test rake. Following field trials and safety certification, the wagon can be inducted into the railway network.

“This will enable special design wagons for specific industry needs. This will also create a new structure of wagon design and manufacturing industry. Currently the entire industry is limited in its scope for innovation,” the ministry of railways said in a statement.

The policy also allows oil companies and other industries to design and introduce tank wagons tailored to their operational requirements. At present, oil tank wagons are owned entirely by Indian Railways, with limited flexibility for industry to develop new designs.

Greater use of containers

The reform package also targets greater use of containers for commodities including fertilizers, fly ash, food grains, flour, and pulses by encouraging specially designed containers suited to each cargo type. For fertilizers, the Railways has revised the freight structure to a per-km, per-tonne basis with a flat-tapered-flat pricing structure. Freight was decided earlier through a classification system based on commodity groups, weight, and distance, and the freight table had 50 slabs.

In the container business, Railways has introduced a unified nationwide Container Train Operator (CTO) licence, replacing route-specific permissions. Operators will pay a uniform registration fee of ₹25 crore for access to the entire railway network, and licences can be extended after 20 years of successful operations without an additional fee.

Separately, Indian Railways announced construction-sector reforms aimed at tightening contractor eligibility while streamlining project execution. Contractors will be required to furnish performance security of 10% and will be eligible to bid only if the value of pending litigation does not exceed 50% of their net worth. No performance security was charged in 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 land handed over in clearly defined sequential phases.

Railways also announced a policy to skill artisans working on railway projects and infrastructure works.