Unlocking growth: Railway freight portfolio diversification in India
The Indian Railways (IR) plays a pivotal role in India’s economic growth by facilitating the movement of freight across the country. As of 2023–24, IR holds a modal share of approximately 25%–27%4 in national freight transport, translating to 1,588 million tonnes (MT) of cargo movement.5 Recording a growth of 4.5%6 in the last five years, IR has set ambitious targets to increase its freight business – it aims to reach 3,000 MT by 20277 and achieve a modal share of 45% by 2030.8 This aspiration aligns with national priorities to reduce logistics costs and promote sustainable transport. A range of initiatives, including the National Rail Plan (NRP), PM Gati Shakti, dedicated freight corridors, electrification and multi-tracking, have been implemented to strengthen infrastructure and enhance operational capacity. These measures are designed to create a physical and systemic foundation for scaling freight movement by rail. However, infrastructure augmentation alone is insufficient to meet development targets. Achieving a higher modal share also requires a strategic shift in freight portfolio composition. The current reliance on a limited set of bulk commodities presents constraints because the growth potential of such commodities is limited due to sectoral trends and operational bottlenecks. Therefore, due to inherent limitations in rail-based logistics, pushing the modal share of these commodities beyond a certain threshold is often impractical. Diversifying the freight basket emerges as a critical lever to unlock growth, capturing high-value, containerised and time-sensitive cargo. This approach has been acknowledged at the policy level, notably in the NRP, which advocates for including new commodity segments within balance other goods (BOG), such as automobiles and consumer durables.
Key Takeaways
- The FICCI–PwC Knowledge Report on “Diversification of Railway Freight Portfolio” provides a data-driven assessment of India’s current rail freight mix and outlines the urgent need to diversify beyond traditional bulk commodities to unlock future growth.
- While Indian Railways’ freight volumes have grown at a CAGR of 5.6%, the portfolio remains heavily concentrated, with coal accounting for 50% and other bulk commodities like cement and iron ore contributing a significant share. This highlights the limited diversification in the freight basket.
- The report identifies a major opportunity in non-bulk and high-growth segments such as FMCG, e-commerce, automobiles, electronics, and pharmaceuticals, which are currently dominated by road transport despite rail’s cost efficiency over long distances.
- It emphasizes that infrastructure development alone is not sufficient—a strategic shift in operational, pricing, and logistics frameworks is essential to enable modal shift, improve asset utilization, and attract new commodity segments.
- With initiatives like the National Rail Plan, PM Gati Shakti, Dedicated Freight Corridors, and 100% electrification, Indian Railways is well-positioned to expand its share. The report underscores the need for multimodal integration, private sector participation, technology adoption, and skill development to build a future-ready, efficient, and sustainable freight ecosystem.