$245m World Bank loan to Indian Railways to upgrade logistics infrastructure

Extending its support to India’s railway modernization efforts, the World Bank has approved a $245 million loan to support India’s initiatives to modernize rail freight and logistics infrastructure.

The World Bank Rail Project is gaining prominence as recently the national carrier commissioned the bank to carry out an impact analysis of rail network in Indian Railways with increased volume of freight and passenger traffic as well as the speed of freight and passenger trains.

The ongoing World Bank study will determine the likely impact on capacity with increased speed and will also determine the likelihood of a semi-rapid corridor on the Delhi-Mumbai and Delhi-Howrah routes which have already been identified to increase the speed potential for the semi-fast speed level, i.e. 160 km/h.

The rail logistics project will help India shift more traffic from road to rail, making transport – both freight and passenger – more efficient and reducing millions of tonnes of greenhouse gas emissions. greenhouse (GHG) each year. The project will also induce more private sector investment in the rail sector.

Indian Railways is the fourth largest rail network in the world, having transported 1.2 billion tonnes of freight in the fiscal year ending March 2020. Yet 71% of Indian freight is transported by road and only 17% by rail. IR’s capacity constraints limited volumes and reduced the speed and reliability of shipments. As a result, IR has lost market share to trucks over the years; in 2017-2018, its market share was 32%, compared to 52% ten years earlier.

Road freight is the largest contributor to GHG emissions, accounting for approximately 95% of freight sector emissions. Trucks also accounted for around 12.3% of road accidents and 15.8% of total road transport fatalities in 2018.

Rail emits about a fifth of truck GHG emissions, and with IR planning to become a net zero carbon emitter by 2030, it has the potential to remove 7.5 million tonnes of carbon dioxide and d other greenhouse gases each year.

“While reducing greenhouse gases, the new project will also benefit millions of rail passengers in India, as rail lines will be decongested with freight moving to dedicated lines,” said Hideki Mori, Chief Operating Officer. and Acting Country Director, India, World Bank. “The integration of railways into the wider logistics ecosystem is also key to reducing India’s high logistics costs, which are much higher than in developed countries. This will make Indian businesses more competitive.

The rail logistics project will strengthen India’s multimodal transport hubs and terminals, improving rail connections to ports and inland gateways, and establishing first and last mile connectivity with railways.

The new Eastern Dedicated Freight Corridor-3 (EFDC), also supported by the World Bank, is already contributing to faster and more efficient movement of raw materials and finished goods between northern and eastern India. The rail logistics project will link several other such infrastructure projects and bring private sector efficiencies to increase rail capacity, create and manage intermodal terminals, and improve service quality and value-added services through private train and terminal operators.

One of the main objectives of the project will be to harness commercial finance by engaging the private sector and developing client-centric approaches. The project will also support institutional capacity building of the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) as a business organization and equip it to provide multi-modal logistics services.

“India is increasingly focusing on multimodal transport, especially with railways as the central pillar of efficient logistics in the freight segment,” said Saroj Ayush and Martha B Lawrence, Chief Executives. World Bank team for the project. “The project will help leverage the efficiency of the private sector to integrate rail transport into freight supply chains.”

The project has a particular focus on combating gender-based violence and will support regular community awareness campaigns on the issue. It will also undertake activities aimed at systematically improving the entry and transition of women in the railway sector, in particular by improving the presence of women in technical positions; creating safe working environments for contracted and informal workers; and prioritizing childcare for informal workers on construction sites.

The $245 million loan from the International Bank for Reconstruction and Development (IBRD) has a 22-year maturity, including a seven-year grace period.

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