Strategic Insight into the Indian Rail Market

LONDON, Aug. 24, 2016 /PRNewswire/ -- By 2020, the Indian Railways Will Invest Over $100 Billion to Create Transformational Digital Change

This market insight provides an outlook of the growth opportunities for the rail industry in India. Ambitious government plans coupled with unprecedented levels of foreign investment are leading to a complete overhaul of the rail environment in India. Over 39 cities are planning to invest in expansive urban rail networks to address severe traffic congestion problems. High-speed rail and dedicated freight corridors are planned to separate passenger and freight traffic to increase operating efficiency.

Introduction
The Indian rail system is one of the largest railway networks in the world, serving over 7,112 stations connected by a network length of 65,808 km. However, it is plagued by abysmal service quality levels, frequent delays, accidents caused by severe shortages in funding, as well as aging assets and infrastructure. Indian Railways is the state-owned enterprise that manages all railway-related activities in India. With a huge population of 1.25 billion (2014), Indian rail operations largely cater to passenger traffic. Trains are often overbooked and overcrowded, and it is normal practice for ticketless passengers to bribe on-board ticket collectors instead of purchasing the appropriate fare.

Exhibit 1 compares the utilization of rail networks around the world with freight or passenger traffic. The 4 largest rail networks are in the United States, Russia, China, and India. However, the exhibit also makes clear the state of decay in the Indian railways. The United States and Russia are heavily focused on freight operations, while China maintains a strong balance between passenger and freight operations. Indian rail freight volumes are extremely low compared to passenger traffic; passenger operations are subsidized, creating further gaps in revenue generation.
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