In its bid to become a world-class transporter, Indian Railways is intensifying its push on infrastructure, freight, safety, sustainability and self-reliance, with mixed results. The transition reflects industrial growth, sustainability, technological progress and nation‑building, writes Manish Pant.
On a humid July morning, after flagging off India’s first hydrogen-powered train on the Jind-Sonipat section in Haryana, Prime Minister Narendra Modi said the rapid modernisation of Indian Railways had cushioned India from an energy shock. Referring to fuel supply disruptions from the ongoing West Asia conflict, he told cheering crowds, “If such a situation had arisen before 2014, the entire railway system would have come to a halt because most trains ran on diesel. Imagine if diesel imports had stopped, the nation would have faced a massive crisis.”
From about 20 per cent of its network before 2014, Indian Railways has raised broad-gauge electrification to 99.6 per cent in the past 12 years. The shift is critical for the world’s fourth-largest rail network by route length, which remains one of the most cost-effective ways to move people and
goods across India. In FY2025-26, the system carried 7.41 billion passengers and hauled 1,670 million tonnes of freight.
The timing was opportune: the launch of India’s first hydrogen train, operating on an 89-km route on a pilot basis. The train, developed by Indian Railways, has a power output of 2,400 kW (about 3,200 hp) and is currently the world’s longest and most powerful hydrogen trainset on a broad-gauge platform. The Railways says it is the result of indigenous research and development, with integration carried out at the Integral Coach Factory in Chennai. Ever willing to make a presentation, Ashwini Vaishnaw, Minister of Railways and a former civil servant, told the Jind audience, “The green hydrogen is stored in cylinders on the train. The fuel cells then convert the hydrogen into electricity, which drives the train’s motors. It’s a simple process: instead of smoke, only water vapour comes out.” Together with electrification, solarisation of stations, water conservation and energy-efficiency measures, it is part of the Railways’ efforts to achieve net-zero carbon emissions by 2030.
Meanwhile, electrification saved about 1.85 billion litres of diesel in 2024-25, reducing fuel consumption, emissions and dependence on imported crude. India is now the world’s second-most electrified large railway system, after Switzerland.
The urgency for change is clear. The government has steadily raised budgetary support to the sector. “Indian Railways is undergoing perhaps the most significant transformation in its modern history,”
observed Mangal Dev, Head of Hitachi Railway Systems Business for India and South Asia. “Beyond infrastructure expansion, the real opportunity lies in creating an integrated railway ecosystem that combines digital intelligence, electrification, sustainability and indigenous manufacturing capability.”
Gross Budgetary Support for capital investment in Railways has risen from`290.55 billion in FY2013-14 to `2.78 trillion
in FY2026-27, marking a structural shift in public investment. “This is no longer a maintenance-led expenditure cycle; it is a network transformation programme aimed at capacity, safety, technology, passenger experience and logistics competitiveness,” averred Jagannarayan Padmanabhan, Senior Director & Global Head, Consulting, Crisil Intelligence, a research analytics firm.
Spending patterns have also shifted.
“This indicates a move from incremental improvements to system-wide modernisation,” Padmanabhan added. More funds now go into new lines, expansion of existing corridors, rolling stock upgrades, safety systems, electrification, station redevelopment and freight infrastructure.
This is part of a larger structural capacity-creation and modernisation cycle. Dhruv Gadh, Partner, Infrastructure, Transport & Logistics, and Nitin Kumar, Director, Transport & Logistics at the consultancy PwC, shared in
a note with magazine: “The objective is to
move beyond asset addition and build a more reliable, productive and future-ready rail system that can increase rail’s modal share, reduce logistics costs and improve connectivity to underserved regions as the country’s core people and goods mover.”
Under the Amrit Bharat Station Scheme, 1,340 stations are being redeveloped, with work completed at 261 as of July. Electrical or electronic interlocking has been provided at 6,671 stations, including electronic interlocking at 3,954, while Kavach, India’s indigenous Automatic Train Protection system, has been commissioned over more than 3,100 route km, with implementation under way across another 21,900-plus km.
Corridor projects for energy, minerals and cement are advancing to improve logistics efficiency and reduce costs. Speed upgrades are reshaping operations. More than 80 per cent of the network now supports sectional speeds of 110 kmph and above, compared
with 40 per cent in 2014. Segments capable of 130 kmph and above have expanded 3.5 times, from 6.3 per cent of the network in 2014 to 22.4 per cent in 2026.
Dedicated Freight Corridors (DFCs) are easing congestion and boosting reliability. “The DFCs are designed with a ten‑minute headway, allowing a train every ten minutes,” said Praveen Kumar, Managing Director, Dedicated Freight Corridor Corp. of India.
“With a daily four‑hour maintenance block, each corridor can run 120 trains per direction, or 240 trains in total.”
Padmanabhan said that multimodal integration is particularly important, with the rail network increasingly connected to ports, airports, industrial corridors, warehouses, logistics parks and urban transport systems. “PM Gati Shakti and the National Logistics Policy provide the right framework, but the execution challenge lies in terminal connectivity, land availability, common digital platforms and coordination across agencies.” As of July, 142 Gati Shakti Cargo Terminals had been commissioned, providing 224 million tonnes a year of freight-handling capacity, while another 310 had been approved.
“Collectively, these outcomes show that the capital programme is moving beyond asset creation and beginning to translate into higher network capability, improved safety, better reliability and stronger readiness for future passenger and freight growth,” maintained Gadh and Kumar.
Rising passenger expectations around comfort and digital ticketing, along with growing demands for more efficient freight operations, asset monitoring and project planning, are also laying the foundation for a more data-driven railway system.
Manufacturing momentum
The expansion in railway infrastructure is opening new opportunities across India’s $31 billion rail market, according to data from Praxis Global Alliance. “Indian Railways has historically had a strong domestic manufacturing base, particularly through its production units and PSUs (public sector units) in locomotives and rolling stock,” said PwC’s Gadh and Kumar.
The Chittaranjan Locomotive Works, set up in 1950, was the first dedicated locomotive plant, followed by the Integral Coach Factory in Chennai in 1955. “This has increasingly been complemented by greater private sector participation, technology absorption and domestic capability development,” added Gadh and Kumar. Research Designs and Standards Organisation (RDSO), the Railways’s technical advisory body, continues to anchor design standardisation, approvals and R&D.
Touax Texmaco Railcar Leasing recently announced an `18 billion investment in 100 new rakes over three to five years. The three-way partnership—Touax Group (34 per cent), Texmaco Rail & Engineering (34 per cent) and TrinityRail Global (32 per cent)—will integrate design, manufacturing, financing and leasing. The venture targets India’s `3 trillion rail freight ecosystem.
At an event in New Delhi to mark the JV, industry veteran Saroj Kumar Poddar, Chairman, Texmaco Rail & Engineering and Adventz Group, said, “As India aims to increase rail’s share in freight movement from 27 per cent to 45 per cent under the National Rail Plan, the need for innovative, technology-led rail solutions has never been greater.”
Analysts see India moving towards a stronger indigenous ecosystem, driven by large domestic demand, public procurement, Make in India and localisation mandates. Crisil’s Padmanabhan said its long-term strength will hinge on predictable procurement pipelines, R&D ownership, component depth, quality benchmarks, small and medium enterprises (SME) participation and export orientation. “India has the scale to become not only a large domestic manufacturing market but also a railway systems exporter. But that shift requires standardisation, stronger testing and certification capacity, global-quality supply chains and clear industrial policy.”
Railways explicitly stated in March 2023 that the Russia-Ukraine disruption had affected imports, with India having to source more wheels from China. This prompted the push for new domestic forged-wheel manufacturing capacity. The Ramkrishna Forgings-Titagarh Wagons consortium emerged as the lowest bidder for one such long-term programme, while Jupiter Wagons has pursued its own capacity expansion through Jupiter Tatravagonka Railwheel Factory in Odisha. “Indian railway manufacturing is becoming an export proposition, not only an import substitution one. Our ten‑year supply agreement with Tatravagonka will see about 50,000 wheelsets annually exported to Europe once Odisha [plant] is fully operational,” said Vikash Lohia, Deputy Managing Director, Jupiter Wagons Ltd.
Lohia said three factors were critical while committing scale: ordering visibility during the long commissioning period, procurement that recognises design and technology capability alongside price, and approval and testing infrastructure. “Certification throughput for indigenised designs is, in my view, the single largest determinant of how quickly capability converts into supply.” The company is also looking to enter passenger rolling stock, though Lohia declined to share more details.
Other suppliers are also scaling up. ArcelorMittal Nippon Steel India said the sector’s exacting requirements for safety, quality, durability and performance had helped strengthen its capabilities. “Through landmark railway infrastructure projects, we have built deep expertise in producing advanced steel grades for critical applications,” said Ranjan Dhar, Director & Vice President, Sales & Marketing, AM/NS India. The ArcelorMittal-Nippon Steel JV has supplied steel for the Chenab Bridge, Vande Bharat trains and the Mumbai-Ahmedabad bullet train project. It is also a leading supplier of corrosion-resistant steel for railway wagons. “These experiences have further strengthened our manufacturing, metallurgy and quality assurance capabilities.”
Hitachi’s Dev said the ecosystem’s strength depended on localisation, supplier development, innovation and digitalisation. “The most successful ecosystems are built not only on assembly but also on engineering, design and innovation. Greater localisation of critical technologies, combined with technology transfer from global leaders, will be essential.” He added that India’s railway manufacturing sector must evolve from serving domestic demand to becoming an export hub for rolling stock, signalling products, traction equipment and railway software solutions.
The scale of future requirements could be a major catalyst for creating sustained demand across rails, signalling systems, electrification, modern rolling stock and related components. “This gives the manufacturing ecosystem the scale, visibility and investment pipeline needed to mature,” stated Gadh and Kumar. The seven high-speed corridors announced in the 2026-27 Budget span about 4,000 km and are expected to attract around `16 trillion in investment, while the proposed Dankuni-Surat East-West DFC, extending over 2,000 km, is estimated to cost `1.75 trillion. Alongside this, government-owned railway engineering companies such as Rail Vikas Nigam Ltd (RVNL), Ircon International and RITES are diversifying beyond rail infrastructure to broaden their footprint across India and overseas. Saleem Ahmad, Chairman & Managing Director, RVNL, said, “Railways will remain an important part of our business.
At the same time, disciplined diversification will enable us to participate more meaningfully in India’s infrastructure transformation and create long-term value.” This diversification could help these companies scale their operations, diversify their revenue streams and take their core engineering expertise to new markets.
Funding challenge
Affordable mass transportation is a legitimate public-service objective. But if ‘world-class transporter’ also means commercial sustainability, the Railways still has considerable ground to cover. Given its social obligations, financial sustainability has not kept pace with physical modernisation. Proposals for greater private participation have often attracted political opposition, particularly when they involve passenger operations or railway assets.
In a reply to a question during the Winter Session of Parliament in December 2025, Minister Vaishnaw said, “Last year [FY2024-25], the Railways gave `600 billion worth of subsidy so that passenger transport can remain affordable. Even compared to neighbouring countries, India is providing the most affordable transportation to its citizens. If you compare it with any other developed country, it is almost one-tenth, or sometimes even 5 per cent, of the cost of the ticket.”
The Railways’ FY2023-24 accounts show an operating ratio of 98.43 per cent, meaning it spent about `98.43 to earn `100 of ordinary working revenue. Its passenger segment had an operating ratio of 177.69 per cent, while freight was far healthier at 67.55 per cent. The figures show the extent to which freight earnings help offset losses on passenger services. Passenger fares were first rationalised in July 2025 after a five-year gap, followed by another calibrated revision in December, with increases ranging from 0.5 paise to 2 paise per km.
With a pipeline of high-cost projects, fiscal sustainability is critical. “Sustained public investment has been critical, but over time Indian Railways will need a larger role for private capital, asset recycling, station-linked commercial development, outcome-based contracting and technology partnerships. Bankable PPP (public-private partnership) structures will be essential in areas such as terminals, logistics parks, rolling stock, maintenance depots and station operations,” said Padmanabhan.
Observed Gadh and Kumar, “The c (hybrid annuity model) could be an important step in this direction, enabling private capital to participate in rail infrastructure as sector capacity and appetite evolve towards more demand-oriented PPP models.”
Private-sector participation is gradually increasing through wagon leasing, freight terminals, private freight train operators, logistics parks and manufacturing under PPP. “India’s railway modernisation is increasingly becoming a globalised ecosystem, where overseas investors too are playing a growing role across funding, technology, manufacturing and long-term operations. The momentum is driven by growing credibility of Indian Railways in the global market, India’s emergence as a global rail manufacturing hub, 100 per cent FDI under the automatic route in specified railway infrastructure activities and predictable large-scale demand,” said Anil Bhavnani, Group Head, Transportation and Infrastructure Finance Group, HDFC Bank, India’s largest private sector bank.
Bhavnani noted rising overseas investment from multilateral agencies such as JICA, ADB and the World Bank, alongside infrastructure funds, pension funds and foreign OEMs. He said the shift towards public-private participation was already visible. “Also, because of the size of investment required to support the ambitious growth trajectory, Railways is transitioning from being almost entirely government-funded to a hybrid financing model that combines public investment, institutional finance, private capital and international funding.”
As Indian Railways and private concessionaires tap international capital markets, banks in India, including private banks, will continue to play a catalytic role in structuring cross-border financing, partnering with global investors and providing vendor financing for SMEs supplying components, capex loans for new rolling stock factories and working capital for engineering, procurement and construction (EPC) contractors.
“Finally, the success of Indian Railways should be measured not only by kilometres of track laid or trains introduced, but by its contribution to reducing logistics costs, improving supply-chain reliability, supporting industrial growth, enabling net-zero
objectives and improving the everyday experience of passengers and freight customers,” observed Padmanabhan.
Dev affirmed that the railway sector’s transformation is therefore much larger than a transportation story. It is a story of industrial development, sustainability, technological advancement and nation-building. “The next phase of growth will not be defined only by new tracks or trains, but by how effectively technologies such as AI, advanced signalling, predictive maintenance, automation and energy-efficient power systems are deployed across the network.”
At the beginning of 2026, Minister
Vaishnaw committed the Railways to undertaking 52 reforms in 52 weeks. By July, the Railways had announced 17 structural reforms spanning technology and digitalisation, safety, freight transportation, construction practices, skilling and ease of doing business. Addressing the media at his New Delhi office in July, Vaishnaw said, “This ‘Reforms Express’ is integral to the Railways’ efforts at building a future-ready rail network. The reforms will serve to enhance efficiency, promote innovation and strengthen the railway ecosystem.”
With 35 reforms still to come under the 52-in-52-weeks commitment, the targeted systemic improvements in efficiency, governance and service delivery are still miles away from their destination, with little more than four months left.
“Beyond infrastructure expansion, the real opportunity lies in creating an integrated railway ecosystem that combines digital intelligence, electrification, sustainability and indigenous manufacturing capability.”
– Mangal Dev, Head of Hitachi Railway Systems Business for India and South Asia
“This is no longer a maintenance-led expenditure cycle; it is a network transformation programme aimed at capacity, safety, technology, passenger experience and logistics competitiveness. This indicates a move from incremental improvements to system-wide modernisation.”
– Jagannarayan Padmanabhan, Senior Director & Global Head, Consulting, Crisil Intelligence
“The objective is to move beyond asset addition and build a more reliable, productive and future-ready rail system that can increase rail’s modal share, reduce logistics costs and improve connectivity to underserved regions
as the country’s core people and goods mover.”
– Dhruv Gadh, Partner, Infrastructure, Transport & Logistics, and Nitin Kumar, Director, Transport & Logistics, PwC
“As India aims to increase rail’s share in freight movement from 27 per cent to 45 per cent under the National Rail Plan, the need for innovative, technology-led rail solutions has never been greater.”
– Saroj Kumar Poddar, Chairman, Texmaco Rail & Engineering and Adventz Group
“Indian railway manufacturing is becoming an export proposition, not only an import substitution one. Our ten‑year supply agreement with Tatravagonka will see about 50,000 wheelsets annually exported to Europe once Odisha [plant] is fully operational.”
– Vikash Lohia,
Deputy Managing Director, Jupiter Wagons Ltd.
“Through landmark railway infrastructure projects, we have built deep expertise in producing advanced steel grades for critical applications. These experiences have further strengthened our manufacturing, metallurgy and quality assurance capabilities.”
– Ranjan Dhar,
Director & Vice President, Sales & Marketing, AM/NS India
“Railways will remain an important part of our business. At the same time, disciplined diversification will enable us to participate more meaningfully in India’s infrastructure transformation and create long-term value.”
– Saleem Ahmad,
Chairman & Managing Director, RVNL
“Last year [FY2024-25], the Railways gave `600 billion worth of subsidy so that passenger transport can remain affordable. Even compared to neighbouring countries, India is providing the most affordable transportation to its citizens. If you compare it with any other developed country, it is almost one-tenth, or sometimes even 5 per cent, of the cost of the ticket.”
– Ashwini Vaishnaw,
Minister of Railways, Government of India
“Also, because of the size of investment required to support the ambitious growth trajectory, Railways is transitioning from being almost entirely government-funded to a hybrid financing model that combines public investment, institutional finance, private capital and international funding.”
– Anil Bhavnani,
Group Head, Transportation and Infrastructure Finance Group, HDFC Bank