How Indian Railways Is Emerging As The Most Preferred Carrier Of New Vehicles In The Country

Indian Railways (IR) has emerged as the preferred carrier of automobiles in the country, which is reflected in an increase in the booking of new modified goods (NMG) wagons by the automobile companies. A total of 3,344 NMG rakes (a rake is a full train) were booked in financial year (FY) 2021-22, an increase of 25 per cent from the previous financial year.

The railways uses NMG wagons and bogie covered autorake double decker wagon (BCACBM) to move cars.

NMG Wagons

NMG wagons have emerged as the choice for transporting newly manufactured cars from the factories to various distributors across the country. These are single-decker automobile carriers constructed out of old Integral Coach Factory (ICF) coaches.

Generally, all the windows and doors on the side walls of the old coach are removed, opening closed and the end body modified by providing doors to allow vehicles to be driven into it. These wagons have perforated type floors to facilitate lashing of wheels of the vehicles. Ceiling of the coaches is repaired, fully covered and painted so that no rust/corroded material drops down o­n cars.

NMG coaches are fit to run at a maximum permissible speed of 75 kmph with a maximum permissible pay load of 9.2 tonnes. The conversion cost is around Rs 8.37 lakh per coach.

NMG coaches were initially converted in 1991 from overaged ICF coaches for transportation of Maruti vans. Considering accelerated phasing out of ICF coaches with Linke Hofmann Busch (LHB) coaches and increasing requirement of NMG rakes, all ICF coaches in the age group of 20 years and above have now been permitted for conversion into NMG coaches in February 2020.

New Modified Goods-Higher Speed (NMGH) Wagons

IR has rolled out a high speed variant of NMG wagon which can travel at a speed of 110 km per hour. The first rake of high speed NMG comprising 25 coaches in total, rolled out from Bhopal in Madhya Pradesh in September 2021.

Research Designs and Standards Organisation (RDSO) under the Ministry of Railways allowed conversion of a non-AC ICF design coach to automobile carrier coach after a useful passenger service life of 19-20 years in 2021. This design has been allotted transportation code of NMGH and is suitable for maximum permissible speed of 110 kmph.

NMGH coaches have 47 per cent higher speed potential and lower maintenance requirement by way of standardised and improved design of conversion involving lesser maintenance time, cost, reliable service and better turnaround of rakes.

Automobile Freight Loading

Indian Railways is attaining new heights in transportation of automobiles. The total loading of automobiles through the railways was only 429 rakes in 2013-14, which has increased to 1,595 rakes in 2019-20.

According to a report in the Business Standard, automobile freight loading for Indian Railways increased 34 per cent in FY22 (2021-22). A total of 3.35 million tonnes (mt) of automobiles was ferried by the national transporter in 2021-22, a Ministry of Railways official told the newspaper.

Betting high on the demand from the automotive industry, the railways are aiming to achieve a modal share of 20 per cent by the end of 2021-22, and a modal share of 30 per cent by 2023-24.

The Opportunity

At present, Indian Railways’ modal share in transportation of automobile traffic is very meagre. To put things in perspective, automobile loading was just 0.28 per cent of the IR’s freight receipts of Rs 1.23 lakh crore in FY20. Automobiles account for a miniscule portion of the railways' total freight numbers because they're not as heavy compared to other big-ticket items that make up the railways' freight basket.

Concurrently, given the current low car penetration, rising prosperity and the increasing affordability of private vehicles, the automobile industry is growing even faster in India.

India is expected to be the world’s third largest automotive market in terms of volume by 2026, driven by an industry which manufactured 22.9 million vehicles in FY 22. Two wheelers and passenger cars accounted for 77.24 per cent and 15.91 per cent market share, respectively, accounting for a combined sale of over 17.8 million vehicles in FY21.

The passenger vehicles involve an inland transport element before being delivered to customers and thus a large share of them — particularly those that are transported for more than 600-700 km — could be moved by rail. The potential is obvious.

As the automobile sector is one of the fastest growing sectors in India, Indian Railways in recent time have undertaken a number of initiatives to capture automobile traffic and facilitate bulk transportation of automobiles from production clusters to consumption centres.

Recent Changes

Indian Railways has been in the process of diversifying its freight basket, seeing automobiles as a potential space to tap into. It has liberalised its automobile freight train operator (AFTO) policy in 2021, with the aim of attracting more interest from automobile companies.

Apart from incentives available under the policy, it allows for private players to run these wagons. Maruti Suzuki is the first auto manufacturer in the country to obtain an AFTO licence. This allows private firms to fabricate and operate high speed, high capacity auto-wagon rakes on the Indian Railways network.

India Inc

India’s auto industry is boosting the freight loading of Indian Railways like never before. From Mahindra & Mahindra, Tata Motors and Hyundai to new entrants like MG Motors and Kia, there is a line-up of auto manufacturers aiming to increase the share of railways in transporting cars.

India’s largest carmaker Maruti Suzuki India Limited (MSIL) has transported over 7.2 lakh vehicles using Indian Railways in the past five years. In 2020-21, more than 1.8 lakh vehicles took the rail route for transportation, the highest-ever railway dispatch by the company, as against nearly 88,000 units in 2016-17.

The likes of Tata have also started using railway transportation to ferry its new cars from Sanand Plant to different parts of the country.

The Pune Division of Indian Railways earned Rs 45.51 crore in revenues solely by transporting vehicles from various automobile manufacturers in the industrial areas of the district in the financial year ending 31 March. Vehicles manufactured at factories of Tata Motors, Mahindra & Mahindra, Skoda and Volkswagen were sent to various destinations within India as well as to neighbouring countries, including Bangladesh and Nepal.

“In April 2021-March 2022 fiscal, Pune Division ran 301 freight trains (with 7,558 wagons) to transport automobiles manufactured in the vicinity. The vehicles were loaded from Chinchwad and Khadki stations. The revenue earned, Rs 54.51 crore, is the highest ever in this segment,” said Manoj Jhavar, Public Relations Officer, Pune Division.

Clearly, India Auto Inc is finding good value in transporting its finished goods by the rail route rather than sticking to the conventional truck logistics model. Immediate benefits to OEMs include IR’s expansive network, better reliability and cost efficiency compared to road logistics.

Moreover, it also allows offsetting the carbon footprint as a single train can replace several trucks running on the road. For instance, in the case of Maruti Suzuki, increased focus on using the railways has helped the company offset over 3,200 MT of carbon dioxide emissions, cumulatively since 2016. The company has previously said that it aims to transport at least half of its cars via the railways by 2030, in a bid to reduce carbon emissions incurred on account of road transportation of car units.

The automobile industry is quite ecstatic with these reforms and committed to increasing market share of Indian Railways in automobile transportation. The railways would certainly emerge as the most preferred carrier of automobiles in the country.