Indian Railways looks to ease freight customers woes with this interesting “buy your own wagon” policy

7th may 2018

In another interesting move, Piyush Goyal led Indian Railways has decided to allow freight clients to buy their own wagons and then offer them to the national transporter under its “buy your own wagon” policy. Under this policy, the national transporter will allow its clients, both in government and in private sector, to purchase wagons to rid themselves of any wagon shortfall the railways might have in a certain sector at a particular time of the year, according to an IE report. The report also stated that the unavailability of rakes is a frequent irritation point for freight customers at various times of the year.

Additionally, the national transporter is also likely to offer clients a 10 per cent rebate in freight rate for 15 years who bring their own wagons. As opposed to special wagons and containers, it applies to general purpose wagons which form the majority of the wagon stock in the railway system. The report said that they are both open wagons as well as box-type closed wagons of various specifications.

The report stated that 8,000 wagons were procured by Indian Railways in 2017-18 and it also said that each wagon is of worth Rs 30 lakh. The national transporter has a fleet of around 2.8 lakh wagons in circulation. The bulk of the fleet at around 1.26 lakh wagons is formed by the box-type wagons. According to Railway Board Member (Traffic) Mohammad Jamshed quoted in the report, through the “buy your own wagon” policy, the railways is looking for private investment in general purpose wagons to expand its fleet in addition to its own enhanced wagon procurement plan.

According to sources, Coal India and cement manufacturers form the majority of the share of railway freight basket. Also, both of them have shown interest in the new policy, they added.

The report also mentioned that the policy also has certain riders. For example, to meet the technical standards, the wagons of rakes will have to be procured from the sources approved by the national transporter. Also, before buying them, the clients will have to take route-specific permission from the transporter so that the railways does not commit to running client-owned rakes in routes where the capacity is already choked with its own rakes and passenger trains. Moreover, as wagon lease charges every year per wagon, the freight rebate offered under this policy cannot exceed the amount Railways pays to IRFC (Indian Railway Finance Corporation). The wagons are bought by IRFC, which leases them to railways. Also, till the loan against each wagon is paid off, an amount is paid by railways to IRFC, which is a mix of interest and principal towards each wagon.

Source: FINANCIAL EXPRESS