Boosting India’s Logistics: Railway’s Gati Shakti Cargo Terminal Initiative

Source-This post on Boosting India’s Logistics: Railway’s Gati Shakti Cargo Terminal Initiative has been created based on the article “Cargo terminals will boost efficiency” published in “Business Standards” on 30 April 2024.

UPSC syllabus-GS Paper-3– Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

News- The Ministry of Railways is planning to offer 200 Gati Shakti Cargo Terminals to private firms and freight operators. According to government estimates, the 200 new terminals would require an investments worth ~12,000-14,000 crore. Boosting India’s Logistics

What are some of the issues faced by the railway sector?

1)  Indian Railways has plenty of surplus land.However,it is not being utilized efficiently.

2) Indian Railways lost a lot of cargo business to road sector largely due to its own inefficiencies and partly because of significant improvements in road infrastructure.

Read more– National Monetisation Pipeline Project

What is the government’s policy on long-term leasing of railway land?

Aim– The policy includes building 300 Gati Shakti Cargo Terminals over the next five years.

Provision-

A) The policy allows leasing railway land for cargo facilities for up to 35 years, charging 1.5% of the land’s value annually.

B) The allocation is made through competitive bidding.

What is the significance of this move by the government?

1) Enhance capacity of logistics sector-It will ensure better utilization of railway’s land and further boost the capability in the logistics sector.

2) Ownership rights– The railways will not incur additional expenditure in this area. The successful bidders for these terminals will bear the cost of building the facility and take the business risk, while the railways will have the ownership.

3) Boost the revenue– Improved logistics will help generate additional cargo traffic for the railways and boost its revenue. As per estimates, each new terminal could add 1 million tonnes of cargo yearly, giving about 100 crore extra revenue.

4) Boost internal trade-Improved cargo facilities, along with added services, would boost internal trade and further enhance the ease of doing business.

5) Employment potential-The development of cargo terminals is estimated to generate 120,000 employment opportunities.

6) Minimize carbon emission-Transportation of freight by railways as opposed to the roadways is more cost efficient and helps contain carbon emission.

Question for practice

What is the significance of offering 200 Gati Shakti Cargo Terminals to private firms and freight operators?