The World Bank has approved a $245 million loan to support India’s efforts to upgrade rail freight and logistics infrastructure, the international financial institution said in a statement on Wednesday.
The Rail Logistics project will help India shift more traffic from road to rail, making transport – both freight and passenger – more efficient and reducing millions of tonnes of greenhouse gas emissions (GHG) every year. The project will also induce more private sector investment in the rail sector.
Indian Railways is the fourth largest rail network in the world, having transported 1.2 billion tonnes of freight in the fiscal year ending March 2020. Yet 71% of Indian freight is transported by road and only 17% by rail.
The statement also said that Indian Railways’ capacity constraints have limited volumes and reduced the speed and reliability of shipments.
As a result, it lost market share to trucks over the years. In 2017-2018, its market share was 32%, compared to 52% ten years earlier.
Road freight is the largest contributor to GHG emissions, accounting for approximately 95% of freight sector emissions. Trucks also accounted for around 12.3% of road accidents and 15.8% of total road transport fatalities in 2018.
Rail emits about one-fifth of truck GHG emissions, and with Indian Railways planning to become a net carbon emitter by 2030, it has the potential to remove 7.5 million tonnes of carbon dioxide and d other greenhouse gases every year, he added.
“While reducing greenhouse gases, the new project will also benefit millions of rail passengers in India, as rail lines will be decongested with freight moving to dedicated lines,” said Hideki Mori, Chief Operating Officer. and Acting Country Director, India, World Bank.
“The integration of railways into the wider logistics ecosystem is also key to reducing India’s high logistics costs, which are much higher than in developed countries. This will make Indian businesses more competitive. The International Bank for Reconstruction and Development (IBRD) loan was approved by the World Bank’s Board of Directors and has a 22-year maturity, including a seven-year grace period. The new Eastern Dedicated Freight Corridor-3 (EFDC) is also supported by the World Bank.
The statement said that one of the main objectives of the project will be to harness commercial finance by engaging the private sector and developing customer-centric approaches. The project will also support institutional capacity building of the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) as a business organization and equip it to provide multi-modal logistics services.
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