Cabinet approves reduction in railway land licence fee to 1.5%, allows lease up to 35 years

Container Corporation of India Ltd. (CONCOR), was incorporated in March 1988 under the Companies Act, and commenced operation from November 1989 taking over the existing network of 7 ICDs from the Indian Railways. (Representative Image)

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The Union Cabinet announced on September 7 that it has approved the policy on long-term leasing of Indian Railways' land and has cut the land licence fees from 6 percent to 1.5 percent, Minister of Information and Broadcasting Anurag Thakur said. The lease period has also been increased from five years to 35 years.

The Cabinet's approval for the much-awaited amendment to the Railway Land Policy would ease the strategic divestment process of Container Corporation of India (Concor) and make it more attractive to private investors. The development is in line with NITI Aayog's recommendation to keep the railway land leasing fee for containers below 3 percent.

The proposed changes will pave way for the privatisation of Concor because it will help strategic buyers pay much less amounts as land rentals to railways for a longer period. This was one of the key suggestions put forward by the investment advisors of Concor.

The Cabinet had in November 2019 approved the divestment of the government's 30.8 percent shareholding in the company, along with the transfer of management control.

While stating the benefits of the policy, the government said the move will help increase railways' modal share in freight transportation and reduce the logistics costs of the industry. The government also said that the revised land policy will bring more revenue to railways and create 1.2 lakh jobs.

Further, as part of the new amendment, existing entities using railway land for cargo terminals will have the option to switch to the new policy regime after a transparent and competitive bidding process.

The amendment will also help the government develop 300 cargo terminals across India in the next five years and will benefit the implementation of the PM Gati Shakti framework.

The changes under the new policy that will be implemented in the next 90 days are expected to increase the modal share of rail in freight transportation and reduce overall logistic costs in the country.