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Under the policy, the rebates for carrying auto on railways are in-built into the freight rates offered by the railways. An earlier AFTO scheme launched in July 2010 had allowed private sector entities to induct and operate special wagons on network. They were offered 15 per cent rebate on freight rates for every rake loaded. In case of high capacity wagons, for every increase in throughput of 10 per cent an additional two per cent rebate on freight rates was provided. But the policy evoked a cold response from the industry.
Sugato Sen, deputy director general, Society of Indian Automobile Manufacturers (Siam) told Business Standard, “The earlier policy was not competitive as compared with rates offered by road freight transporters. Now, the rebate has been in-built into the freight rate by the Railways." For distances less than 1500 km, however, roadways are more competitive by around 15-20 per cent because they offer last mile transportation. "We are satisfied with the structure of the new policy overall and are open to negotiations. We are committed to move more freight by rail.”
Though the Railways currently carry around one million vehicles, mainly cars, light commercial vehicles and two wheelers and three-wheelers, on its own trains, the new policy will allow privately owned trains dedicated to automobiles just like container trains. As many as 318 small cars of the size of Maruti's Alto will be moved in one go as against 265 cars that can be currently transported in one train load.
Railway networks in developed countries already transport a major chunk of automobiles and the cost there is 10 per cent cheaper than roadways. For instance, in the US, 70 per cent of automobile transport is via railways, while it is 35 per cent in Europe and 16 per cent in China. On the contrary, in India, just six per cent of the 17.38 million passenger vehicles, two-wheelers and three-wheelers sold last year were transported by train. In 2009-10 less than one per cent of auto freight was transported via railways.
Sen added, “The railways’ contribution to automobile transport is likely to go up to 15 per cent and then on to 25 per cent over the next five years as and when the infrastructure is put in place. This would mean lesser transportation time as well as freight cost for car manufacturers, especially in far-flung areas especially in the north-east where road connectivity is poor.”
In addition to this, even third party logistic providers can invest and operate special freight wagons to transport vehicles. A prototype wagon designed by Titagarh Wagons has already been tested by Research Design and Standards Organization (RDSO). A second such special rake is being developed by RDSO according to the specifications provided by SIAM. This wagon is expected to be tested in the next few months .
The AFTO will have marketing arrangements with companies to transport automobiles. They will be required to own full rake composition including brake van with 4 per cent additional wagons as spares.
