Rail Budget 2016: Chennai to get India's first rail auto hub

Railway Minister Suresh Prabhu has announced that the government will soon set up India's first rail automobile hub in Chennai. This announcement in the railway budget for 2016-17 is welcome news for the auto industry.

The announcement also includes the establishment of rail-side logistic parks and warehousing facilities in a private-public partnership. With the government providing the requisite logistical support, there seems to be a positive vibe amidst manufacturers as these steps are likely to enhance operational efficiencies and reduce transportation costs as well as time.

Chennai is commonly referred to as 'Detroit of the East' due to the number of automobile, two-wheeler and commercial vehicle manufacturing facilities in and around the region.

Maruti has been using rail transportation for over two decades now, and it contributes to less than 5% of its domestic sales (balance being taken care of by road transport). Hyundai moves about 1% of its domestic sales by rail. In 2014, the Indian Railways flagged off its first Flexi-Deck Train (read more). The capacity of this train is 20% greater than that of the regular rakes.

Later in 2014, as a result of a newly framed policy by the Indian Railways, car transportation began by railways in association with the private sector. This move generated a lot of interest among private companies to acquire rakes and register as auto freight transport operators. The Indian Railways would require approximately 100 rakes by 2020, even if it carries only one-fourth of the finished vehicles by rail.

Source: Autocar Professional
Image Source: TheRailzone