Crime Today News
Key target sectors would include coal, cement and steel and subsequently other sectors could be tapped
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JOTHI RAMALINGAM B
In a sweeping move to reclaim market share from the road logistics sector, the Railways is crafting a policy to slash freight rates for short-distance cargo hauls of 250-300 km, government officials familiar with the discussions, told businessline.
The initiative, aimed at bolstering rail’s competitiveness and addressing last-mile connectivity, marks a significant pivot for the national transporter as it seeks to reshape the country’s logistics landscape.
Despite its vast network of over 68,000 km, Railways handles just 29 per cent of India’s freight, compared to road’s 65 per cent, according to Ministry of Railways data.
The Railways intends to take it up to 35 per cent in the coming years.
The policy, still in its formative stages, is designed to undercut the cost advantage of road transport.
Key target sectors would include coal, cement and steel and subsequently other sectors could be tapped, if initial responses are positive.
Rail vs road
At approximately ₹2.5 per tonne per km, road transport is nearly twice as expensive as rail’s current rate of ₹1.36 per tonne per km – but the advantage comes into play only when travel distances exceed 700 km and above. Moreover, road travel enjoys last mile connectivity – to the warehouses – a segment which Railways is now trying to address.
“Rail has the cost edge on paper, and also when distances travelled are 800–1,000 km there is near monopoly for the national transporter. But road has owned the short-haul market because of accessibility. If we (Railways) can crack last-mile delivery and cut rates, it’s a direct shot at the trucking industry. Some of this is under discussion,” the official said.
Waterways, at ₹1.06 per tonne per km, remain a niche player in the cargo movement segment.
India’s logistics sector, valued at over $200 billion, is a critical artery for the world’s fifth-largest economy. But inefficiencies — high costs, fragmented network, and heavy reliance on diesel-powered trucks — have long hampered growth.
Multiple Pilots On
Multiple pilot projects are already underway in industrial belts like Gujarat and Maharashtra, where rail sidings are being upgraded to handle smaller, time-sensitive consignments—a domain traditionally dominated by trucks.
Dedicated tracks have been identified for movement of short lead cargo, while there is a push to set up warehouse and sheds, near these terminals. Rake standardisation – instead of repurposing older ones – for easy cargo movement and faster loading and unloading, has been carried out too.
“Railways will have nearly 100,000 wagons at disposal soon, which makes dedicated movement of cargo in short lead distances viable,” the official said.
Between FY14 and FY24, the average wagon manufacturing in India was around 15,875. This has gone up three-fold in FY25, to 43,000, sources said. While locomotive production has nearly doubled to 1,681 in FY25 as against 900 during that the previous 10 -yea period.
Published on April 19, 2025
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