Railways mulling 1,00,000 more wagons amid rising freight, coal demand

Railways recently floated a large tender for wagons worth hRs 35,000 cr, which had been in the pipeline since 2018

Amid rising demand for coal freight and an aggressive push towards diversifying its freight basket, Indian Railways is planning to buy 1,00,000 more wagons over the next three financial years.

The procurement plan will majorly consist of BOX N wagons, which are used to transport coal, a senior ministry of railways official said. Notably, the railways recently floated a sizable tender worth Rs 35,000 crore of wagons, which had been in the pipeline since 2018.

“Our budget estimates for freight increase were conservative. With the encouraging freight numbers in this financial year, we want to attain higher numbers both in this year and in the medium-term,” the official added.

According to the budget, railways aims to increase its annual freight loading to 1475 mt, with a projected revenue at Rs 1.65 trillion in 2022-23.

Under the National Rail Plan (NRP), the Centre wants to significantly increase the national transporter’s freight numbers, along with its modal freight share to 45 per cent by 2030. As per government estimates, consolidated demand for freight will be over 6300 million tonne (mt) by 2026 and 8220 mt by 2031.

Having ferried 1418 mt in this fiscal, the national transporter would need to account for over 3600 mt in 2031 to meet its NRP targets. In the medium-term, it is targeting over 2000 mt by 2024.

As per some leading wagon suppliers, stakeholder consultation for this plan has not happened yet, but during previous interactions with the railway board, the industry was keen to have increased wagon supply orders on a rolling or annualised basis.

While the plan is at a nascent stage right now, the anticipated demand for rail freight has given the ministry the impetus to go forward with it, the official said.

Ashish Kumar Gupta, managing director of leading wagon supplier Texmaco Rail & Engineering, feels that soon after the floating of a mega tender, another one to be executed in the same timeline could prove to be a tall order, but not insurmountable.

“This new wagon procurement plan, when it comes to fruition will be a welcome step. The recently floated tender had been in the works for a long time, and it will lead to more investment in capacity upgradation. While another tall order like 100,000 wagons could test the industry, ramping up our capacity should not be a big challenge. As an industry, we can upgrade our production ability with a steady flow of orders,” he said.

The national transporter would also need to replace its old and obsolete wagons to overhaul its supply system. “The current fleet of wagons has 10-12 per cent that need replacement. An order like this would augur well as it serves the purposes of incremental freight loading and also revitalising the current wagon fleet,” Gupta said.

Recently, the national transporter had also allegedly not provided enough rakes for the supply of coal to thermal power plants. Against a demand of 441 rakes per day, railways has been able to allot 405, as per latest data from the ministry.

Meanwhile, coal freight has increased 111 mt or 20.5 per cent in this financial year alone. The additional requirement of coal-ferrying wagons comes on the back of this demand.

Additionally, the ministry also wants to diversify its freight basket, which is largely dominated by raw materials right now. Sector experts feel that last-mile connectivity and smooth operations for railways are vital if it wants to woo corporate clients and add more finished goods to its basket.

As per data released on Friday, Indian railways ferried 15 mt more of goods other than its core commodities this fiscal.