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Why it will be a challenge for private trains to operate in India

Private trains in India: Revenue-sharing clause, sheer level of investment required, competition from airlines could prove to be stumbling blocks

July 22, 2020 / 10:35 PM IST

The world’s largest transporter of passengers is preparing to change the way Indians travel. For the first time in 167 years, Indian Railways (IR) has begun the journey to allow private parties to operate trains.

On the anvil is a two-stage bidding process to award 12 rail clusters. The selection criterion is a simple one: whichever qualified bidder offers the highest share in gross revenue to Indian Railways for a cluster wins the bid. The bidder is free to fix fares as per the concession agreement and levy other charges normally seen in air travel, such as those for preferred seats, luggage etc.

Indian Railways has said that private operators will be running trains only on about 5 per cent of its vast network, at 151 trains. IR’s own trains, with subsidised fares, will continue to run on these routes alongside the private trains. The entire process is geared to provide passengers better services and enable induction of new technology into the railway network.

16 prospective bidders