Freight transportation efficiency is universally recognized as pivotal to India’s economic progression.

As India hastens to ascend as a global vanguard in freight logistics, the reverberations of this advance are felt across international economies.

At the heart of this metamorphosis lies the $1.65 billion Eastern Dedicated Freight Corridor (EDFC), a transformative railway initiative exclusive to cargo. This corridor is integral to India’s most audacious rail project since attaining independence in 1947. India has injected $550 million into the EDFC, bolstered by a $1 billion contribution from the World Bank.

The EDFC’s 1,200-kilometer Ludhiana-Mughalsarai segment stands as a critical milestone, more so as it forms a central vein of the broader Dedicated Freight Corridors (DFC).

Addressing the longstanding tribulations of the Indian Railway (IR), the dual strategic ambitions of the EDFC are:

First, to augment rail capacity, enhance service quality, and escalate freight volumes on the 393-kilometer Kanpur-Mughal Sarai segment of the Eastern DFC. Second, to nurture the institutional prowess of the Dedicated Freight Corridor Corporation of India (DFCCIL), equipping it to construct, maintain, and operate the entire rail network.

The grand vision is to shift freight transport towards safer, more sustainable modes along the EDFC while fostering DFCCIL’s evolution as a resilient entity providing rail freight and multimodal logistic services.

Freight transportation efficiency is universally recognized as pivotal to India’s economic progression. The nation’s logistics sector, currently valued at $150 billion, is the backbone of the economy.

The Economic Times projects that by 2029, India’s freight and logistics market will burgeon to an annual valuation of $484 billion, propelled by an 8.8% growth rate.

Generating approximately 4.6 billion tonnes of freight annually, Indian logistics demands an exorbitant transportation capacity of over 3 trillion ton-kilometers, incurring a staggering cost of $129.6 trillion.

IR is indisputably vital to India’s logistics matrix, boasting the world’s fourth-largest railway network, spanning 68,000 kilometers. It stands as the second-largest passenger and the fourth-largest freight railway globally. In the fiscal year 2022-23, IR transported 1.3 billion passengers and 1,418 million tonnes of freight.

Freight traffic on IR has risen at a compounded annual growth rate of 3.7 percent, a surge constrained by infrastructural limitations and congestion that impede volume, speed, and reliability.

IR’s revenue reached about $23.7 billion, with freight transport contributing roughly $15.4 billion, and reported an operating ratio of 98.4 percent.

Railways play a decisive role in diminishing India’s substantial logistics costs, which account for 14 percent of GDP, significantly higher than in developed countries.

A significant portion of India’s freight involves bulk commodities with extensive hauls, ideally suited for the cost-effectiveness of rail. Yet, roads bear the lion’s share of 73%, with railways trailing at 27%. A modal shift to rail is essential to curtail logistics expenditures.

The environmental implications are stark; freight transport CO2 emissions in India are estimated to surge by 451% from 2020 to 2050. Furthermore, the sector is culpable for significant particulate matter and greenhouse gas emissions.

Conversely, India has pledged to cut the emissions intensity of its GDP by 33 to 35 percent by 2030. Rail transport, with one-fifth of the greenhouse gas emissions compared to trucks, offers a cleaner alternative and holds the potential for substantial reductions in greenhouse gas emissions. In an ambitious move, IR aims to achieve net-zero carbon emissions by 2030.

Yet, IR grapples with capacity constraints and dwindling market share, with the expansive Golden Quadrilateral being its busiest and most freight-laden stretch.

A decade of reforms has witnessed capacity expansions and efficiency enhancements. Today, the most critical bottleneck remains physical infrastructure.

The National Rail Plan aspires to bolster capacity in anticipation of future demand. The plan postulates a potential increase in rail share to 45%, given adequate infrastructural support to lower transit times and costs.

Identifying strategic choke points for capacity upgrades, this infrastructure development is underscored in the National Infrastructure Pipeline 2020-2025, which earmarks $224.8 billion for rail investment over five years.

The World Bank’s involvement with Indian railways extends beyond funding, aiming to infuse commercial acumen, private sector participation, and innovation into the sector.

This article was originally posted in Tomorrow’s Affairs.