"To capture the automobile traffic, we will soon inaugurate India's first rail-auto hub in Chennai," Prabhu informed parliament while presenting the Railway Budget 2016-17.
According to the minister, inadequacy of warehousing and transportation facilities is one of main reasons that keeps potential customers away from the railways.
"In order to complete the chain of transportation, it is proposed to develop rail-side logistics parks and warehousing," the minister said.
"These logistic parks and warehouses would be created in PPP (public-private partnership) mode to bring the required efficiency and investment but also help attract greater traffic to the railways."
The minister predicted a paradigm shift in the Indian Railways' role as a "national logistics provider" once the Transport Logistics Company of India (Transloc) is formed.
"The focus will be on providing last-mile connectivity for freight business and significant reduction in logistic costs. At least 10 goods sheds will be developed by Transloc in 2016-17," the minister disclosed.
"This push on rail side warehousing would also encourage development of cold storage facilities on vacant land near freight terminals."
The minister added that local farmers and fisherman would be given preferential treatment to use these facilities.
"A policy in this regard would be issued in the next three months," the minister added.