How Policy Contradictions Have Stalled Indian Railways’ Reform Agenda

For more than three decades, Indian Railways has explored ways to modernise its operations while balancing its public service responsibilities. The creation of Focused Business Organisations (FBOs) was a thoughtful step in this direction, aimed at separating non core activities and introducing greater commercial discipline. What was originally conceived as a transitional arrangement has gradually evolved into a stable institutional structure, reflecting the Railways' cautious approach to reform.

This evolution, however, sits alongside a broader policy narrative articulated by senior government leaders, including the Prime Minister, that the state should gradually step back from direct commercial activity. In practice, the Ministry of Railways has preferred to retain ownership of its public sector undertakings while also creating new ones, resulting in an expanded administrative role in commercial operations. This reflects a desire to maintain continuity and control, even as the debate on strategic disinvestment continues.

Most railway CPSUs operate in relatively sheltered markets, with assured access to railway business. While this has provided stability and predictable growth, it has also limited competitive pressures that often drive sharper efficiency gains and innovation. When the same ministry functions as owner, regulator and principal customer, accountability frameworks can become complex, and performance improvements tend to be incremental rather than transformational.

The experience of Container Corporation of India illustrates both the strengths and the challenges of this approach. Proposals for its strategic disinvestment have been announced at various points, only to be deferred, creating uncertainty for potential investors. While these pauses may reflect careful deliberation, repeated postponements can give an impression of policy hesitation and make long term planning more difficult for stakeholders.

The Union Cabinet has already approved the sale of a 30.8 per cent stake in CONCOR along with the transfer of management control. Implementing this decision in a timely manner would strengthen institutional credibility and demonstrate alignment between policy intent and execution, an important factor for investor confidence.

This is particularly relevant because CONCOR itself remains a strong and well performing enterprise. The company is profitable, has recorded around 10 per cent volume growth, operates more than 60 terminals across the country and provides integrated logistics connectivity. It has drawn interest from global operators and long term investors alike. Unlocking its full potential depends less on operational capability and more on clarity and consistency in policy.

The land licensing fee framework further highlights the need for clearer role separation. The Ministry of Railways currently acts as landlord, regulator, competitor and majority shareholder. Although land licensing guidelines were revised in 2023, some ambiguity persists, and addressing this would help reduce perceived risks for private participants.

Strategic disinvestment in this context is not about asset sales alone. For CONCOR, it represents an opportunity to accelerate growth. With the Western Dedicated Freight Corridor becoming operational, a privately managed CONCOR could be better positioned to attract cargo from road to rail, improving logistics efficiency and supporting cost reduction across the economy.

What is required now is a clear and time bound reform signal. Removing the "on hold" status and announcing a defined timeline for CONCOR's strategic disinvestment in 2026-27, including the transfer of management control, would provide much needed certainty. This would also allow Indian Railways to concentrate more fully on its core priorities of network expansion, safety and service quality.