No non-competing clause may prove a hurdle for pvt train operators: Ind-Ra

Could amplify cash flow risks for investors

The absence of a non-competing clause in the railway contract for private trains could amplify the cash flow risks for investors. The Indian Railways plans to have 151 private trains in 109 routes by 2023.

While demand risk also exists in the other sectors, the introduction of competition elevates the risk in this model. The Railways expects an investment of around Rs 30,000 crore in these trains. 

In other sectors, there are some exclusivity clauses prohibiting competition. Absence of this clause casts higher uncertainty on revenues,” said a report by India Ratings and Research (Ind-Ra).   

The current model allows