Indian Railways to cut fees to win back cement business

In response to cement producers shifting away from transporting their output by rail, Indian Railways has announced that it plans to reduces charges for firms that can guarantee that at least a specified volume of freight goes by rail, Mint reports.

In January 2017 Indian Railways carried around 6Mt of cement, down 15 per cent YoY. Higher freight charges have been blamed for the decline, with producers shifting transport onto the roads as a result.

To combat this, the Ministry of Railways has unveiled new long-term contracts that would offer discounts of between 1.5-35 per cent provided firms undertake to transport at least a specified minimum volume of cement by rail. Besides cement, the new contracts will also apply to steel and fertiliser freight.

However, analysts have raised doubts that cement firms will find the new incentives sufficient to shift business back to rail. While larger firms, including UltraTech and ACC, are said to be in talks with the ministry, it is not clear if smaller companies are able to meet the volume requirements.