Indian Railways to allow Private Firms to run Freight Trains

The Indian Railways is set to let private firms run freight trains from their own terminals. They’ll still use the railway infrastructure, and will pay to do so.

NEW DELHI: In what is likely to pave way for privatisation of the railways, the Indian Railway is set to allow private companies to run freight trains. These companies will run freight trains from their own terminal, though they will be using the railway infrastructure for which they will pay a fixed sum to the financially ailing railways.

The move assumes significance as entry of private players would not only break the monopoly of the railways but also help the national transporter recover from the financial crunch.

A senior railway ministry official said under the freight-train operations scheme, companies can lease rakes from Indian Railways or have their own rakes manufactured as per their specifications.

However, the train operations will still be managed by railways and companies will have to pay charges for using railway track and other infrastructure. The decision has been taken in wake of the union Cabinet approving the setting up of Rail Development Authority which is mandated to bring in the rail reforms.

This body will help the national carrier take decisions on pricing of services commensurate with costs, protect consumer interests, suggest measures for enhancement of non-fare revenue, promote competition and encourage market development. It will be mandated to create positive environment for investment, promote efficient resource allocation and bench-marking of service standards, and suggest measures for absorption of new technologies.


As per the plan, private companies from cement, iron and steel, chemicals and fertilizers, food grains and automobile sectors have expressed their interest in operating their own freight trains.

Many of these companies have their own terminals that will be used for loading and offloading the goods. Railways estimated that with entry of private companies, its freight capacity can go up by nearly 30 million tonne. If the experiment is successful, it can be repeated for passenger services as well. For the current year, railways has decided to allow 55 private freight terminals in the country at an investment of Rs 5,000 crore.


The railway ministry had earlier moved the idea of leasing out its iconic hill railways, including Darjeeling, Kalka-Shimla, Matheran and Nilgiri divisions, to private companies for operations. An official said train operations on these routes have been largely unprofitable and hence the idea was mooted to lease them out to private players, including the overseas companies.

Notably, the existing policy on investment in railways allows 100 per cent foreign ownership. The railways, with a 1.54-million workforce and about 6,800 stations, runs about 7,000 trains every day to ferry passengers, an activity that is generally unprofitable.