Whalesbook
Indian Railways has laid out an ambitious plan to significantly increase its freight handling capacity, targeting 3,000 million tonnes by 2030. This initiative aims to establish the railway network as the central pillar of India's logistics system. The plan is supported by substantial investments in infrastructure, including the Dedicated Freight Corridors, and the adoption of new technologies to boost efficiency.
Despite these efforts, Indian Railways' share of the total freight transport market remains lower than in many developed economies, typically around 25-30%. This contrasts with global benchmarks of 40-50% or more for bulk cargo. Consequently, India's logistics costs are high, estimated at 13-14% of GDP, far above the global average of 8-10%. Projects like the DFCs are improving transit times for bulk goods, and the PM GatiShakti plan aims to better connect different transport modes.
However, efficiency gains are hampered by ongoing issues. Key railway routes frequently reach full capacity, leading to delays. There is also a shortage of specialized wagons needed for different types of cargo, and train turnaround times can be slow. These operational bottlenecks limit how much cargo the railways can move effectively.
Attracting private sector investment is crucial for further development and innovation, but this remains a significant challenge. Complex regulations, uncertainty over pricing, and perceived operational difficulties deter private companies. While recent policy changes, such as the Railways (Amendment) Act, 2025, and updated public-private partnership frameworks, are intended to make projects more attractive, their real impact will take time to materialize. Investors often look for faster approvals and longer contract periods to justify their capital.
Experts suggest that meeting the ambitious freight capacity targets depends heavily on overcoming these deep-rooted structural problems, not just on building new infrastructure. The continued dominance of road transport and persistent efficiency gaps highlight the need for fundamental changes. The railway's reliance on government funding and policy shifts, coupled with the ongoing issues of capacity limits and last-mile connectivity, means that the goal of becoming a dominant logistics backbone may prove difficult to achieve without substantial reforms. The effectiveness of new policies in truly unlocking private capital is yet to be seen.