The railways ministry has sought the approval of the Union cabinet to build three new dedicated freight corridor (DFC) networks at a total investment of about ₹3 trillion, said a senior government official aware of the matter, in what may help Indian Railways meet growing demand for faster and efficient movement of freight.
While the East-West Corridor (2,328km) will be built between Kolkata and Mumbai, the North-South Corridor (2,327km) is planned between Delhi and Chennai and the East Coast Corridor (1,114km) between Kharagpur and Vijaywada.
Indian Railways’ DFC project involves constructing five freight corridors across the country. The railways, through its arm Dedicated Freight Corridor Corp. of India Ltd (DFCCIL), is already building the first two freight corridors—Eastern Freight Corridor from Ludhiana to Dankuni (1,856km) and Western Freight Corridor from Dadri to Jawaharlal Nehru Port (1,504km)—at a total cost of ₹81,000 crore.
The railways plan to complete more than 60-70% of the work in the two corridors this financial year and make them fully operational by 2021.
In the railway budget 2016-17, the government had proposed to take up three more freight corridors. Infrastructure projects typically have long gestation period and some DFCs have taken over a decade due to hurdles over land acquisitions as well as delay in sanctioning loans.
Another government official aware of the matter said the projects would be financed through public-private partnerships (PPP) or by raising funds from foreign institutions.
Queries emailed to the spokespersons of Indian Railways and DFCCIL remained unanswered.
The freight corridors are key to the government’s infrastructure projects that seeks to decongest railway network, ensure faster movement of goods, increase the national carrier’s freight capacity network and reduce overall logistics cost for companies. Rationalization of freight rates has always been a top industry demand as higher logistics expense escalates the overall cost of a product.
India has been grappling with high logistics costs of 16-18%, making its exports uncompetitive vis-à-vis China, which has lower logistics costs of 8-10%. Earlier this month, finance minister Nirmala Sitharaman in her maiden budget speech said the government is in the process of completing the DFC project, which will free up some of the existing railway network for passenger trains.
The three new DFCs will cover 5,769km. The preliminary engineering and traffic system study of these corridors has already been completed. After the cabinet approval, DFCCIL—a special purpose vehicle set up in 2006 under the railways ministry—will undertake a detailed project planning including plans for land acquisition.
Experts believe projects like DFCs are important and must be given priority. “There has already been a delay in completion of the project. The challenge here is that there’s a large amount of capital investment and there is also a need for adequate preparations such as land acquisitions, arranging the money, and then see if the project happens on time," said Vishwas Udgirkar, partner at Deloitte said.
While the first section of the eastern DFC—200 km stretch from Bhadan to Khurja—and western DFC—another 200 km from Rewari to Madar—has been completed, around 1,000km of DFC, including western DFC connecting states such as Haryana, Maharashtra and eastern DFC connecting Punjab and West Bengal is expected to be operational in the current year.