Moneycontrol PRO
Live Now |Super25 3.0- India’s Largest Online Stock Traders Conference brought to you by Moneycontrol Pro & Espresso
you are here: HomeNewsEconomyPolicy

Private trains: Will rail coaches give airlines a complex and other questions answered

On July 1, Indian Railways invited proposals from private companies to run 151 modern passenger trains. We try to catch the signals of change three years ahead of schedule.

July 03, 2020 / 09:36 PM IST

Swank recliners, plush cabins, on time arrivals and departures, a la carte food menu, sharply turned out cabin crew, a choice of premium on board infotainment and a view of India’s rich and diverse landscape. Sounds like an airline ad wooing passengers?

Not quite.

In four years, if all goes to plan, trains in India could come bundled with such features as privately run services zig-zag across the country.

On July 1, Indian Railways invited proposals from private companies to run 151 modern passenger trains.

For a behemoth like the Indian Railways, the move demonstrates that the government is no longer baulking at taking the next logical leap of opening up the largest pillar of its network—passenger movements—to the private sector.


Capacity building with private participation is vital if the railways are serious about reclaiming market share lost to highways and airlines. Any business plan to turnaround a 150-year-old organisation is about laying the tracks for tomorrow, which the latest move appears to accomplish.

Here’s a lowdown.

What’s the latest move?

Indian Railways has invited proposals from private companies to run 151 modern passenger trains. The railways will shortlist bidders to run train operations on 109 pairs of routes across the country.

Also Read | These companies could be running trains in India

Which are these routes?

Mumbai-New Delhi, Chennai to New Delhi, New Delhi to Howrah, Shalimar to Pune, New Delhi to Patna are some of the routes where the private trains will operate.

When will these trains start operating?

That hasn’t been announced yet. Experts, however, reckon that the first of such trains could start running by 2023-24.

Also Read | Indian Railways privatisation | A look at other countries that have taken this route

What are the next steps?

IR has invited request for qualification (RFQ) from interested private sector players. An RFQ is similar to an expression of interest that will enable IR to shortlist interested parties that are found to be eligible to operate private train services in India based on their technical expertise, existing credentials and financial depth.

This will be followed by request for proposal (RFP), which will likely serve the bidding process for handing out these routes to the operators.

Also Read | Rail stocks gain after govt invites private players to operate trains

What are the specifics that are known as of now?

This will be the first initiative of private investment for running passenger trains over the IR network.  According to the ministry of railways, “the objective of this initiative is to introduce modern technology rolling stock with reduced maintenance, reduced transit time, boost job creation, provide enhanced safety, provide world class travel experience to passengers, and also reduce demand supply deficit in the passenger transportation sector”.

This could potentially result in private investment of Rs 30,000 crore in the sector.

Will the trains, coaches be imported?

Majority of the trains will be manufactured in India under the `Make in India’ initiative. The onus for financing, procuring, operation and maintenance of the trains will be on the private operator.

The private operators, however, may be allowed to decide on the class configuration of each train based on the demand on a particular route.

How different will be the privately run coaches from those that the IR operates currently?

Those details haven’t been specified yet, but certain minimum standards will have to be guaranteed. Coaches will have offer “improved passenger comfort, through use of bogies with superior ride index, efficient air conditioning with automatic temperature and humidity control, superior interiors and toilets etc” among others.

Just like airlines, each of the selected private train operator will offer its own set of on board passenger services ranging from infotainment, food,  and GPS enabled passenger announcement system for on-board announcements for station arrivals, time to next station/destination, safety announcements etc. among others.

Trains will also have folding steps for easy access of physically challenged passengers.

There will also be likely be a dedicated specially trained cabin crew on each of the coaches, similar to airlines.

Last year, Indian Railways commissioned IRCTC to run private trains on its routes. India's first private train IRCTC Tejas Express was introduced on the Delhi Lucknow route that comes with a host of such passenger comfort features.

What about speed?

Trains shall be designed for a maximum speed of 160 kmph, which is equivalent to IR’s fastest train— Vande Bharat, or Train 18 as it was earlier called. It has 16 coaches. It was manufactured at the Integral Coach Factory (ICF) under the Make in India banner and was inaugurated on February 15, 2019. The semi-high speed train can reach 160 km an hour, has automatic sliding doors and powered with other latest technologies.

The privately run trains will also have a minimum of 16 coaches.

According to IR, there would be a substantial reduction in journey time. “The running time taken by a train shall be comparable to or faster than the fastest train of Indian Railways operating in the respective route.”

Private trains running on a particular route may be allowed a head start of 15 minutes on other trains running on the same route. No similar scheduled regular train may be allowed to depart in the same origin destination route within 15 minutes of the scheduled operation of the concessionaires (private players) train.

What if a privately run train is running late or not meeting other standards?

The IR hasn’t specified these yet, but pre-specified penalties will likely be detailed out in the contract with the private operator for failure to meet the prescribed performance standards and outcomes.

How will selection of routes and private operators take place?

These details will be known only after the RFP is issued. The IR has so far said that the concession period for the project shall be 35 years, meaning that the private operator that wins the bid will likely be allowed to run trains on the selected route for 35 years.

This is similar to privatisation of airports where the selected consortia are given the task of running the airports for 30 years.

So, can we expect private sector train drivers or expats (like pilots in the aviation space) running trains in India?

No. Only IR drivers and guards will be allowed to run these trains.

What about fares?

That’s the trickiest bit. IR hasn’t specified the fare fixation system yet for privately run trains. Currently, train fares in the lower class segments are highly subsidised, with the objective of keeping them affordable for a vast majority of Indians.  The key question is whether the private train operator will have the freedom to decide on the fare to be charged from its passengers.

It may so happen that an independent body such as the Railway Development Authority may fix train fares on such routes on principles similar to that of consumer power tariffs that are decided by the Central Electricity Regulatory Commission (CERC) and SERCs—quasi-judicial bodies—based on actual costs.

The private entity, however, will pay IR fixed haulage charges, energy charges as per actual consumption. It will also have to part with a share in the gross revenue determined through a transparent bidding process, similar to the airport privatisation process where the selected private operators had to pledge a portion of their revenues with the government-owned Airport Authority of India (AAI).

Who are the likely potential bidders?

Experts say the potential bidders will be likely through consortium of Indian and foreign players that will have a mix of coach making giants, global train service majors and local partners.

Deutsche Bahn AG (Germany), SNCF (France), MTR (Singapore), Virgin Trains (UK), First (UK) and Renfe (Spain) are among the famous train operators across the world.

Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes

Gaurav Choudhury
first published: Jul 2, 2020 06:44 pm
ISO 27001 - BSI Assurance Mark