THE announcement last week by Indian Railway Minister Lalu Prasad Yadav to launch a dedicated Rs600 billion freight corridor could not have come at a more appropriate time. For, just a day after he proposed building the 9,260-km-long ‘golden quadrilateral’ corridor – linking Delhi-Mumbai-Chennai-Kolkata – a major accident near Vadodara in Gujarat killed over a score of passengers.

The accident occurred when a passenger train rammed into a freight train in the dead of night. Freight trains in India are notorious for causing accidents, getting derailed on treacherous mountainous routes, and for being on the wrong tracks at the wrong time.

Despite freight revenues contributing a substantial chunk of profits for Indian Railways, the undertaking has neglected the sector for decades. Freight earnings subsidise the artificially pegged passenger fares, yet successive governments have refused to invest in upgrading the freight infrastructure.

The minister’s announcement last week was the first major investment proposal involving the goods sector of Indian Railways in decades. The freight division of the railways has been losing business for years to the road transport sector, as manufacturers, importers and exporters have abandoned the railways for more efficient and cost-effective road service.

The railways’ share of total freight carried in India has fallen drastically, from 40 per cent about 25 years ago, to a mere 20 per cent. It takes almost two days for a container train to do the 1,350-km journey from Mumbai to Delhi, one of the most saturated corridors in the country.

Worse, on some sectors the organised mafia – obviously in league with unscrupulous officials – manage to loot railway wagons, and both consignors and consignees have to wait for weeks to settle claims. Most large business organisations, impatient with the inefficient railway freight sector, have been migrating to road transport.

Growth of the freight sector has also been hampered by a scarcity of wagons, while truck manufacturers in India have been flooding the market with both light and heavy commercial vehicles.

More importantly, the National Highway Authority of India, and even various state governments, has been investing billions of rupees in building new expressways and highways (including the ambitious Golden Quadrilateral project), eating into the freight business of the railways.

The Railway minister hopes that the new dedicated freight corridor – exclusively reserved for freight trains, which would be able to go at speeds of above 100 km an hour – is expected to be completed by 2012. And the undertaking expects revenues will jump by Rs10 billion annually.

The federal Ministry of Shipping also has plans for developing a dedicated Mumbai-Delhi container freight corridor. However, if the railways push ahead with the ‘golden quadrilateral’ dedicated corridor, the container freight corridor project may face an uncertain future.

The Mumbai-Delhi container freight corridor is expected to cost about Rs65 billion, and will divert a substantial chunk of freight traffic to the railways. It is being projected as a state-of-the-art multi-modal rail freight corridor, which would service the western and northern hinterlands from Mumbai, the country’s premier port.


THE shipping ministry, besides lobbying for the container freight corridor, is also seeking an up-gradation of the railway network to ensure good connectivity between the dozen major ports in the country.

Unlike in the past, the government is also encouraging the private sector to develop ports. According to D.T. Joseph, the shipping and ports secretary, nearly 40 projects have been taken up (or are in the pipeline) by the private sector at a cost of about Rs100 billion. Many of these projects relate to the setting up of container terminals on a build-operate-transfer (BOT) basis, in and around major ports like Mumbai, Nhava-Sheva, Kandla, Ennore, Chennai and Tuticorin.

A cruise-cum-container berth is also being planned at Mormugoa in Goa, which is expected to attract more cruise liners. C. Venkatachalam, acting chairman, Mormugoa port, notes that several international cruise liners have been seeking berthing permission. Goa is an extremely popular beach destination for European tourists. Similarly, a domestic operator wants to operate a cruise service linking Mumbai, Goa and Lakshadweep islands.

The Indian government wants to develop facilities at other ports including Mumbai, Cochin and Chennai, so that international cruise liners can call on them. At present, none of the Indian ports have dedicated terminals for cruise liners.

India’s premier port, Mumbai, is also investing nearly Rs20 billion to expand and modernise existing facilities. Obviously worried about the growing number of private ports coming up in the neighbouring state of Gujarat – which threaten to eat into its business – Mumbai Port Trust has swung into action.

According to Rani Jadhav, chairman of the port, the new projects include a container berth (on a BOT basis), and marine oil and liquid chemical terminals. The neighbouring port of Nhava-Sheva – which lies across the harbour – also has plans for a fourth container terminal, to be built at a cost of over Rs10 billion.

Unfortunately for Indian ports, despite the aggressive expansion plans, none of them are likely to emerge as major hubs in the region in the near future. Even today, a substantial chunk of India’s foreign trade is handled through ports like Colombo in Sri Lanka, from where they are trans-shipped to Indian ports.

The main reason for this is the lack of adequate container terminals, congestion at the ports, inefficient functioning at the terminals, and their lack of capacity to handle large container vessels.

Other ports in the Arabian Sea/Persian Gulf region – including Dubai and Fujairah in the UAE, Salalah in Oman, and even Aden in Yemen – are investing huge amounts in upgrading their facilities and expanding their operations.

Indian ports have a long way to go before they can attract large ocean-going vessels, and divert business from ports like Colombo and Dubai.

LACK of investments, bureaucratic bungling and political interference has been the bane not just in the Indian ports sector, but also in airports. Mumbai and Delhi airports, two of the busiest in the country, have appalling infrastructure and have stubbornly resisted attempts at modernisation.

While other Asian airports like the ones in Dubai, Singapore and Kuala Lumpur have seen dramatic changes in recent years, India’s leading airports continue to languish, their future held hostage by a few thousand unionised employees and their political backers.

But Praful Patel, the federal civil aviation minister, is determined to end the frustrating logjam that has stunted growth of these two airports, and even restricted airlines from expanding their services. The government is moving ahead with plans to ‘privatise’ the two airports, and the process of selecting the partners is underway.

Nine private consortia have shown interest in becoming joint venture partners, which would manage the two airports. The government-owned airports Authority of India (AAI) will have a 26 per cent stake in the new companies, while the private partners will hold 74 per cent equity.

The ministry expects the exercise to be completed over the next three to four months, and the process of modernising the two airports – at a cost of Rs150 billion – will start in right earnest.

International airlines are eagerly seeking the rights to fly into these two airports, and even the burgeoning domestic aviation sector wants to enhance capacities at both Mumbai and Delhi airports.

The AAI also has plans to upgrade another 30 airports over the next few years, and feasibility reports are currently being prepared. The government hopes that work on upgrading at least five of these airports would be taken up by the end of the year. A whopping Rs400 billion is needed to modernise the aviation infrastructure in India.

Unfortunately, politics has delayed the take-off of several airport projects. The Bangalore international airport project, for instance, continues to suffer from delays, as politicians in the southern state of Karnataka – of which Bangalore is the capital – are still not happy with the new location.

The information technology industry in Bangalore has warned the government that it is losing business because of non-availability of direct flights to the US and Europe, but despite efforts by the federal government, local authorities are dragging their feet.

Entrenched interests are also reluctant to allow new airports to blossom. Many of the existing airports are owned and managed by the Indian Air Force, or even defence units such as Hindustan Aeronautics Ltd. Worried that traffic at existing airports would decline if new ones are allowed to come up in the vicinity of cities like Bangalore or Pune, they have been raising objections to the new projects.

With such stiff opposition to the new airports (including from powerful trade unions, worried over possible retrenchment of existing employees), it is not surprising that the process of modernisation has been languishing over the years.

The Mumbai-Delhi airport privatisation plans are a test case for the government, and if it finally manages to get the new joint ventures flying, it could mean a big victory for the Indian aviation sector.



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