DFC can be a game-changer for India’s economy

27 Apr, 2016  in DFCCIL by rail

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Due to economic liberalisation and basic restructuring of the financial sector, the Indian economy has witnessed more than  7.5 % growth over the past decade, with exports growing at more than 20%. This, in turn, has given rise to an accelerated demand for land transport services of the order of nearly 12% per annum. Unfortunately, our land transportation systems are currently not equipped to respond to this demand. The National highways on the country’s main corridors, comprising 0.5% of the road network, carry almost 40% of road freight. The Indian Railways (IR), with capacity utilisation of up to 150% along major corridors like Delhi-Howrah and Delhi-Mumbai and low share in freight traffic, need to achieve a quantum leap in rail transport capacity.

Keeping this in mind, the Ministry of Railways, in 2005, embarked on a long term plan to construct dedicated rail freight corridors along the golden quadrilateral and its diagonals.

Salient features of DFC Freight lines are to be constructed between Dadri and JNPT in Mumbai (Western DFC) and between Ludhiana in Punjab and Dankuni in West Bengal (Eastern DFC) in the first stage of DFC network creation. The WDFC will be a 1504-km double line track. The EDFC will have a route length of 1856 km.

In the Rail budget for 2016-17, the Ministry of Railways has proposed to take-up North-South, East-West & East Coast freight corridors through innovative financing including PPP, in addition to WDFC and EDFC that are already under implementation.

DFC offers an upgrade over basic design features used currently to enable it to withstand heavier loads at higher speeds. The dimensional parameters of DFC like height, width, train speed, length and train loads are higher than those of the existing system.

Current status of DFC

The Cabinet Committee on Economic Affairs (CCEA) has approved the revised cost of R81,459 crore for DFC. Land acquisition for both the corridors has been to the extent of 81% approximately. During the last year, contracts worth R17,590 crore were awarded for civil works (65%), Electrical Works (48%) and S&T Works (100%). Apart from this, significant progress has been achieved in earthwork and concreting on both EDFC and WDFC.

Key Challenges

DFC has been a showcase project for IR in the past decade but it has suffered challenges relating to land acquisition, utility shifting, funding from multilateral and donor agencies, lack of consensus on the design and re-bidding of construction contracts. These bottlenecks have seen the project fall behind the original timelines.

Way forward

Once DFC is operational, the average speed of freight trains will go up from 25 kmph to 70kmph, reducing the transit time by more than half. Train load would be increased almost thrice (5000 tonnes to 13,000 tonnes), ensuring enhanced economy of scale and reduced cost of transport. This will ensure a higher modal share for railways in the freight business. Also, the capacity released by freight trains on the existing lines can be used by IR to operate more passenger trains at higher speeds, resulting in increased revenues for the transporter.

If completed on a timely basis, DFC has the potential to be a game-changer not just for Indian Railways, but the trade and economics of the country. It will reduce the overall logistics cost of trade between the hinterland and gateway ports, making India a favourable destination for EXIM trade.

Abhaya Krishna Agarwal is Partner—Infrastructure and PPP, Government and Transaction Advisory Services, EY.
Anand Kumar Singh is Associate Vice President—Transportation, Government and Transaction Advisory Services, EY.