This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/5/2019

Overview
Indian Railways (IR) owns and operates the national rail system, which is the backbone of India’s transportation infrastructure, moving 33 percent of total freight traffic across the country. For industrial sectors such as coal, power, steel, cement, and fertilizer the rail system transports over 70 percent. IR currently runs 13,452 passenger trains and 9,141 freight trains daily. As of 2018, IR maintained 1,23,236 kilometers (76575 miles) of total track, connecting 7,318 stations, and its rolling stock consisted of 279,308 freight wagons, 71,825 passenger coaches, and 11,764 locomotives.

Revenue growth for IR remained high with a total earning of $ 25.5 billion in FY18, with freight ($16.21 billion) and passenger ($6.9 billion) earnings being the largest two components.  However, the margin between revenues and expenses is thin, and IR is searching for solutions to operate more efficiently to avoid increasing passenger and freight fares in a price sensitive market.

In the past four years the National Democratic Alliance (NDA) government led by Prime Minister Modi has been focusing on the following priorities:
• Long-term infrastructure building in railways
• Enhancing network capacity and bringing north-east connectivity to broad gauge conversion
• Complete electrification of all routes 
• Borrowed funds from outside and spent $54.5 billion on infrastructure creation
• 9,500 kilometers of broad-gauge lines commissioned between 2014 and March 2018
• Replacement and maintenance of old tracks
• Visible results on safety: 2017-2018 saw only 73 accidents - the first time in 35 years the total accident count went below 100.

As 2019 was an election year, the budget presented by the Finance Minister Piyush Goyal in February was an interim budget in which capital expenditure on railways for the financial year 2019-2020 was fixed at $22.9 billion and capital support proposed at $9.2 billion.  The final budget will be presented by the new government in February 2020, which will shape the course of the Ministry of Railways for the next five years. 

Units: $ millions
 

 

2016

2017

2018

2019 (Est.)

Total India Exports

204.7

303

507.9

635

Total India Imports

419.4

392.5

647.3

971

Imports from U.S.

34.2

24.8

247.8

290

U. S. Share of Imports

8%

6%

38%

30%

Data Sources: Global Trade Atlas Figures and Ministry of Railways

The financial year 2018-19 saw a considerable jump of 38 percent in the U.S. import value which was largely due to U.S. locomotive exports to India as a part of a single major contract.  This contract will likely affect numbers for the coming year as well.

Challenges and Barriers
As one of the largest employment providers in India, IR suffers from operating efficiency challenges due to its bureaucracy, often taking years to resolve a simple decision.  The Ministry of Railways has reiterated a push for ‘Make in India’ in this sector to enhance local manufacturing and procurement of materials.  Companies doing business with IR often face challenges related to bureaucracy, certifications and design approvals, sanctity of contracts, and technology transfer.  Most of the rail projects are tendered by the relevant project authority and require local representation, either through an agent, distributor, manufacturing partner, or associate which helps foreign companies to achieve significant advantage for tenders, accomplishing cost competitiveness, and meeting local requirements.  U.S. companies are also advised to develop and maintain good relationships with key decision makers by regularly visiting the ministry officials and by attending and participating in targeted events.  Companies seeking to enter the market need to be willing to take a long-term view of the market, as decisions on projects can be protracted.

Leading Sub-Sectors
The most promising sub-sectors in the railway equipment sector include:

  • Station Development
  • Signaling
  • Track Doubling, Safety, and Maintenance
  • Heavy Haul Freight
  • Gauge Conversion
  • Green Initiatives: Energy Efficiency, Wastage Reduction
  • Electrification: Complete Electrification
  • Rolling Stock: New Parts, Components and Assemblies
  • Solar Power: Panels Installations on Trains, Stations, Specific Areas

Opportunities
The Government of India’s primary aim for the rail industry is freight infrastructure upgradation.  It has decided to increase throughput on existing network by introducing different types of rolling stock on the system, such as heavy-haul wagons.  There is a need to build terminal infrastructure by upgrading warehouses, and to introduce multi-modal freight parks for multi-commodity shipments and storage facilities.  Improving the rate of construction, contracting process improvement, expedited electrification, and completing the planning of the Dedicated Freight Corridors (DFC) will accelerate freight infrastructure buildout in the coming years.

The Ministry of Railways has also set targets for enhancing passenger experience to make IR the preferred freight carrier in India, non-fare revenues enhancement, modernization by digitization, and cost focus.  The Government has planned to introduce Wi-Fi and CCTV’s in all stations and trains for passenger security.  Indian Railway Station Development will redevelop 600 major stations, and escalators will be introduced to railway stations with more than 25,000 footfalls.  Technology-based measures such as “Train Protection and Warning System” and “Fog Safe” will be taken up by the government.  To ease capacity constraints, 18,000 km of track doubling, third and fourth-line work, and gauge conversion of 5,000 km will be undertaken. 

The IR has shown keen interest in identifying the latest U.S. rail technology for deployment in India.  Taking advantage of this positive inclination, the U.S. Commercial Service is working closely with the Ministry of Railways, organizing two U.S.-India Rail Roundtable events in 2018 which enabled ongoing communications with key officials at the working level, bringing tangible results to several U.S. manufacturers, exporters, and service providers.  It is strongly advised to any new U.S. rail entrant in India to work with the U.S. Commercial Office who can help make a strong market entry impact by leveraging their resources within the Ministry of Railways.

Web Resources
Ministry of Railways     www.indianrailways.gov.in
Associated Chambers of Commerce and Industry  www.assocham.org
India Brand Equity Foundation     https://www.ibef.org/industry/indian-railways
Financial Express (Budget Article)  
https://www.financialexpress.com/budget/indian-railway-budget-2019-live-updates-piyush-goyal-speech-starts-at- 11-am/1461188/

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.