Rising fuel costs and the need to reduce emissions have diverted many automakers from road transport to rail freight. About 15% of the total passenger vehicles produced in the country were moved through rail freight in the last financial year, a four-fold increase over 4.5% rail freight movement recorded in FY18.
The country’s largest carmaker Maruti Suzuki led the shift and last year dispatched over 233,809 vehicles through railways – the highest in a fiscal. This is an increase of 23% over 188,656 vehicles transported via rail in FY21. The company is working at increasing the share of rail transportation from the current level of 15%, industry officials said.
While road freight rates have been on a rise due to an increase in economic activity and a steep hike in fuel prices, rail freight rates have remained stable since the Indian Railways unveiled the Automobile Freight Transport Operator (AFTO) policy in 2013.
In fact, the railways, which has been working at diversifying its freight basket, offers 20% discount on freight rates for distances between 600 km and 1,200 km and special rates on auto freight movement to the Northeast, to attract more automakers to use rail transport.
Maruti Suzuki is India’s first automobile manufacturer to obtain AFTO license in 2013, which allows the company to fabricate and operate high speed, high capacity auto-wagon rakes on the Indian Railways network. The company has 41 railway rakes, with a capacity of 300+ vehicles per rake. Apart from Maruti Suzuki, Transport Corporation of India (TCI), APL Vascor, Adani NYK, IVC Logistics and Joshi Konoike have also secured AFTO licences to cash in on the potential in the space.
