Modernisation is not always about technology—putting station real estate to commercial use is an example of the new thinking that can be included. While the Sam Pitroda-led committee on modernisation of Indian Railways has recommended an impressive range of ramping-up measures, Sajal Mittra says that without implementing at least those recommendations, India stands no chance to be either a competitive global trading partner or an aggressive domestic logistics provider.While India is only beginning to harness the effects of globalisation and the rising purchasing parity, a lack of impetus to core rail infrastructure will serve as an impediment to India’s consumption, having larger ramifications on the growth and well being of this country and its people. The risk truly is that we might lag so far behind that it might be impossible to catch up.In the year 2007, China and India had nearly the same rail network length of around 63,000 km each. In that very year, China carried 2,624 million MT of freight which was nearly four times the freight carried by India (728 million MT) in 2007. This huge disparity only reiterates the level of inefficiency that exists today in the current Indian rail system and the Indian logistics industry at large. Moreover, since 2007, China has added more than 30,000 km of rail track while India in the same period has managed only a little over 350 km. In fact, China is currently working on a project to connect the various parts of the east coast of China with Europe by rail, and are working with the Government of Kazakhstan for gauge conversion of track from Chinese to the Trans-Siberian rail system, which will connect products originating from China through Russia into the Euro Rail system through another gauge conversion in Poland. This will allow Chinese products to have cost-effective access across the European hinterland on the way, as this system will not only be greener but also faster saving approximately 40 to 50 days as compared to the traditional ocean route, where last mile multi-modal connectivity of the product is more expensive.This is a mere example of how far ahead of India the rest of the developing world is thinking and acting on the development of core logistics infrastructure. India’s inaction on the development of such infrastructure—even for domestic business—will mean that Indian products trying to reach the world will be unable to compete with the cost and efficiency with which competitors are able to distribute their products internationally.Much of this competitiveness will emerge from modernisation.Modernisation may mean revampThe report by the Sam Pitroda Committee on Modernisation of Indian Railways was one of the cornerstones of recently presented Rail Budget. The report highlighted the current state of the Indian Railways infrastructure and its pressing need for modernisation. The report has proposed major steps in many core areas such as tracks and bridges, signalling and telecommunication, rolling stock, stations and terminals, Dedicated Freight Corridors (DFCs), IT and High Speed Passenger Rail, to name a few. The recommendations made in the report if implemented will help bring back the Indian Railways on the right track and meet the growing demands of the economy and the people.Among the above mentioned areas, the recommendations on the three core areas of track infrastructure, signalling and telecommunications and rolling stock are of utmost criticality.Tracks: The Committee recommends that the Railways modernise 19,000 km of tracks on the existing high-density routes which comprise nearly 40 per cent of the total network and carry about 80 per cent of the overall traffic. The Committee says the tracks should be upgraded with strong and robust track capable of carrying freight trains at 25 tonne axle load and achieving higher speeds of 75/100 km/h. Some tracks on key routes should also be fit for passenger speeds of up to 160/200 km/h along with mechanised maintenance.The report highlights the fact that out of 1.31 lakh bridges, around 25 per cent are over 100 years old. The recommendation is to strengthen 11,250 bridges to sustain higher loads at higher speeds.Signalling: The Pitroda Committee would like to see:i) implementation of Automatic Block Signalling on major routes with Train Management Systemii) provision of communication-based train control like Moving Block System on specific routes iii) deployment of on-board train protection system with cab signalling on HDN routes.Rolling stock: Wagons and locomotives need technological upgrade, says the Committee, and recommends:i) New generation locomotives, including Electric locomotives (9,000 & 12,000 HP) and High horse power diesel locomotives (5,500 HP)ii) Traction development for improvement in fuel efficiency, emission and reliabilityiii) High-speed potential LHB coaches (160/200 km/h)iv) Train sets for high-speed inter-city travelv) Modern high pay to tare ratio wagonsvi) Heavy-haul freight bogies.Critical tech upgradeThe criticality of safety-related upgrade was precisely the reason why the report presented by Anil Kakodkar-led high level Committee on Safety played an important role in most of the announcements made in the recent Rail Budget. In his budget speech, the then Railway Minister Dinesh Trivedi highlighted the fact that the strained finances of his Ministry has started impacting the safety aspects of the Indian Railways, and that this was a serious area of concern. Therefore, safety related technologies and upgradation should be on top of the priority list and should be adopted immediately on a universal scale. Some of the key recommendations made by the Kakodkar Committee are as follows:1. Adoption of an Advanced Signalling System (akin to the European Train Control System) for the entire trunk route length of 19,000 km within the next five years. This is estimated to cost Rs 20,000 crore.2. All level crossings (both manned and unmanned) to be eliminated over five years. An estimated expenditure of Rs 50,000 crore will be required for achieving this target.3. A switch over from the ICF design coaches to the much safer LHB design coaches. This is likely to cost Rs 10,000 crore over the next five years.Gearing up to DFCPrior to 2006, the Railway Ministry-owned PSU Concor was the only container train operator in the Indian market. But the move in 2006 to introduce privatisation in this space led to the entry of 15 new operators. Post-privatisation, the private operators responded positively and made sizeable investments in rolling stock by adding over 130 rakes, and also added many more Inland Container Depots (ICDs) and private container terminals. Due to the enhanced competitiveness and innovation brought in by the new entrants there was a sudden spurt of growth in the domestic as well as the exim container train volumes. Markets and customers previously being serviced by road due to lack of rail services were moved back to rail because of the new operators. A few operators, including our company, entered the fray with customised business, providing dedicated rakes and customised containers and solutions specific to the needs of the customers.However, since 2010 the growth in the Container Terminal Operator (CTO) space has stagnated primarily due to the restrictive policy regime of the Railways. Introduction of commodity-specific restrictions, notifications and sudden haulage hikes has impacted the long term prospects as well as the day-to-day business of the industry.Container logistics enabling technologies in the Indian rail space are available and needed to take advantage of the upcoming DFCs:1. The Railways should fast-track the ongoing wagon upgradation process for the BLC type wagons. The initiative introduced by RDSO to increase the carrying capacity of the current BLC wagons from the current 81 tonne to 88 tonne, with minimal changes has also hit a roadblock and has been pending with the Railways for over two years now.2. The upcoming DFCs should be capable of running double-stack container trains with higher wagon carrying capacity and at high speeds.3. All terminal infrastructure whether owned by Concor or any other CTO should be available for use by any operator post payment of standard access and other operational charges.4. Efforts should be made to increase the wagon composition of BLC rakes from the current 45 wagons.Is PPP model workable?At this point of time the Railways desperately need all the financial infusions possible. PPPs are one such source of support which can be executed across a wide range of activities including setting up of manufacturing units, rail terminals, mega logistics parks, investments in tracks and other infrastructure, and world class stations to name a few.Yet, there were no major initiatives announced in this year’s Railway Budget on PPP in the core rail sectors. In fact, Trivedi had stated in the media that he intended the railways to fund almost a third of the investment requirement (Rs 7.5 lakh crore) for the next Five Year Plan through private investments. However, not even a single significant step towards encouraging PPP was announced. The only PPP initiatives that found mention were in the non-core areas of catering and tourism. Although such initiatives are welcome, currently budgeted PPP initiatives alone—even if well executed—can’t generate the quantum of investments and funding from the private sector to meet the budgeted requirements.The Railways will have to appreciate the fact that PPP will be a major source of funding only if implemented in the right spirit. The rail budget hence ended up being another missed opportunity to start a turnaround and revive the slowing growth of the railways and the nation.With the most potential to influence a change in the scheme of things, the Indian Rail space needs to ensure that the Indian Railways and private sector come together and prove that India has what it takes to enable successful PPP in the rail space.Vast real estateBased on the objectives set in the Vision 2020 presented by former Railway Minister Mamata Banerjee, her successor Trivedi had estimated the fund requirements for the 12th Five Year Plan at Rs 7.5 lakh crore, of which Rs 2.5 lakh crore is sought as budgetary support from the Centre. This is easier said than done, as IR’s request for Rs 50,000 crore as budgetary support from the centre in FY2013 has been responded with only Rs 25,000 crore. Under such circumstances the Railways will have to come up with unique and innovative ways to generate additional funds from non-core sectors and unused, underutilised assets such as prime land and infrastructure.The Railways should set up a task force at each zonal level to identify potential land, building, infrastructure and other assets that are being underutilised and have a potential to generate good returns if harnessed properly. Based on the study by the task force many more innovative models can be developed and this can create an added source of revenue for the Railways.Airports adopt a model whereby an airport earns from both aeronautical and non-aeronautical revenues such as real estate, airport malls and restaurant leases. Such a model can surely be employed to some extent in the Railways. In fact, such models are being employed on a lower scale at some of the bigger stations even today. However, this is just one of the models that can be developed.The Railways has a much bigger asset base compared to the airports. It has vast reserves of prime land, buildings and other assets which are currently lying unutilised. If carefully studied, the railways can come up with many more innovative non-core business models that can generate added revenues for the Railways, provide better and a wider range of services to its customers and passengers and more importantly contribute to the economy at the local level by generating more direct and indirect employment and business.The author is the CEO, Arshiya Rail Infrastructure, which runs rail operations, FTWZs and Distriparks. Arshiya’s Khurja facility will be India’s largest container terminal along the DFC.Change EPC systemCapital-intensive technology implementation may require a change from piecemeal to turnkey, says Sanjay Chandra.Technologies like mechanised track laying, GPS monitoring, ACDs (Anti Collision Devices) are still in a nascent stage in Indian Railways. Some of the technologies like mechanised track laying and ACDs are capital intensive. Under the current system, typical contract sizes are small, and mostly labour intensive so the works are mostly executed by small contractors. With the impending advent of Dedicated Freight Corridor (DFC) projects, some of the technologies like Radio Frequency Identification (RFID) and Global Positioning System (GPS) will play a major role in tracking the goods, so the onus now lies with the Railways to implement such projects. Such capital intensive technologies will require bigger corporate construction companies to be involved.The Railways will therefore need to shift to turnkey contracts involving design, supply, installation, testing and commissioning for attracting bigger construction companies. This requires a change in EPC environment in railway construction as the focus shifts from smaller contractors to corporate construction companies who have the capability to handle larger and more complex project responsibilities and are willing to share in the project risks (and rewards), and have the financial strength necessary to guarantee successful project execution and completion. Such a paradigm shift will also help Indian Railways to fully exploit its Project Management capabilities.High capital, low interest: Since railway projects are highly capital intensive and have long gestation periods, private sector interest is low. So it might be worthwhile for Railways to interact with potential investors over a period to evolve a document which explains clearly the financial benefits for the investor in public-private partnerships (PPP). The investor making initial investments should be able to make reasonable profits in not more than five years. Thereafter, the facilities should be planned to be taken over by Railways or else the terms may be re-negotiated thereafter for another five years and so on.The author is Chief Executive—Railways, KEC International, an EPC player in rail electrification for over 50 years.