Resource mobilisation may prove a problem for financing projects.
Railway Minister Mamata Banerjee’s measure to hold back an increase in freight rates is likely to boost User industries.
Vishwas Udgirkar, senior director, Deloitte, said: “The minister did not increase freight rates which would be beneficial to the industry as they can now increasingly use the railways for transportation of goods. Banerjee also stressed on the importance of procuring coaches to meet transportation needs in the economy, this would boost sales of companies into wagon manufacturing.”
“Substantial increase in raw material prices over the last few months has already put pressure on the margins of steel companies. Therefore, no direct freight increase comes as a much-needed breather,” said C S Verma, chairman, Steel Authority of India Limited (SAIL). SAIL constitutes around eight per cent towards total rail freight revenues of the Indian Railways.
Additionally, to expand rail-based industries in the country, the minister proposed the establishment of a bridge factory in Jammu & Kashmir. Also on cards are a metro coach factory in Singur, a diesel locomotive manufacturing unit in Manipur and wagon manufacturing facility at Kolar, Alapuzzha and Buniadpur. The ministry has indicated that the first two units would be developed as a joint venture on public-private partnership basis.
Verma added, “Laying of new rail lines, procurement of wagons and related investments in infrastructure are all positive steps with reference to the steel industry. The ministry intends to build over 1,000 km of new lines in the next financial year. Besides, the decision to set up five state-of-the-art wagon factories in JV/PPP mode will go a long way in adding to transport infrastructure of the country.”
Udgirkar, however cautioned while the initiatives augur well for rail-based industry, resources mobilisation may prove a problem for financing developmental works.
The minister has announced that a facility would be set up for indigenous production of large on-track machines at Uluberia. Industrial parks would also come up at Jellingham and New Bongaigaon, which would be clusters “of diverse industrial units whose output would be consumed by the railways”. A unit to manufacture car steel bogies on JV basis between Burn Standard and SAIL has already been initiated in the park at Jellingham.