Eager to expand its freight handling ecosystem building on the newly liberalized land lease policy, the railways has already identified 250 hectares (ha) of its land in 62 locations across the country where the 300 new Gati Shakti cargo terminals could appear in the next five years.
With each cargo terminal allowing an additional revenue of Rs 100 crore – according to internal calculations by officials – the national carrier is eyeing revenue of around Rs 30,000 crore in about five years, thanks to the network of cargo terminals.
More than 90 companies are ready to set up freight terminals and around 65 more have expressed interest, Railways Minister Ashwini Vaishnaw said.
The railways have 62,000 ha of open land, but most are narrow strips parallel to the tracks. Explaining the policy in detail, Vaishnaw said it was necessary with the ultimate aim of reducing logistics costs in India.
“In theory, if all goods were transported by road, the logistics cost would be around 17 to 18% of GDP. Similarly, if all goods were transported by rail, this figure would be around 6-7%. That’s the difference. For the first time in decades, the railways’ modal share in freight has increased since last year. We must encourage this change to reduce logistics costs in the economy. Freight terminals are important in this context,” he told reporters on Thursday, a day after the Union cabinet approved the long-term leasing of railway land at economy rates.
The minister said the new policy has nothing to do with the proposed divestment of CONCOR, the market leader by a huge margin, in the rail freight handling business.
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Vaishnaw said that in addition to the cargo terminals, his ministry was also moving ahead with the plans to set up hospitals on the railway grounds. As reported by The Indian Express on Wednesday, the policy allows for the establishment of hospitals at the nominal rate of Re 1 per square meter for 60 years in public-private partnership (PPP) mode.
“A lot of good hospitals have shown interest in this. The idea is that wherever there is vacant land adjacent to train stations, one could think of setting up good hospitals there for the benefit of the local population,” he said.
The policy also states that in exceptional and unavoidable circumstances, the railway may reclaim leased land for its own use, such as for multi-track and other operational needs. In such cases, he would give sufficient notice as well as compensation based on the tenant’s investment.