Railway Ministry Plans Public-Private Partnership for East-West Dedicated Freight Corridor

The Railway Ministry is considering building the proposed East-West dedicated freight corridor (DFC) through the public-private partnership (PPP) model. Given an earlier unsuccessful PPP experiment for the Sonnagar-Dankuni section on the Eastern DFC, the ministry is planning a different structure for the East-West section dividing the project into “smaller investor-friendly packages,” an official source said. The proposed corridor, announced in the Union Budget 2026-27, stretches nearly 2,100 km and is expected to require investments of over Rs 1 lakh crore. According to the latest plan, it will likely be split into around 10 sections, with each section awarded to a separate concessionaire. Besides private firms, public sector undertakings (PSUs) might also be allowed to bid for these packages, an official said. “The proposal to divide it into 10 smaller sections is under consideration. The entire project will be based on the hybrid annuity model (HAM) under which the concessionaire will be responsible for designing, building, financing, operating and maintaining its allotted section of the freight corridor,” the official said. According to the indicative concession framework prepared by Dedicated Freight Corridor Corporation of India (DFCCIL), the concession period will include the construction phase followed by a 15-year operation and maintenance period, after which the asset will be transferred back to the government. The financial structure seeks to reduce the burden on private developers. For example, the government will reimburse 40% of the project cost during construction through milestone-linked payments while the remaining 60% will be paid as annuities over 15 years after the project is commissioned. The framework also provides inflation-linked payments, annual operation and maintenance compensation, and mobilisation advances to attract wider participation from private players. The official said learning from past experience, the ministry is planning to redesign the project by breaking it into smaller contracts. “The cost of the 534-km Dankuni-Sonnagar section was estimated at about Rs 20,000 crore which required players with deep pockets. But since the project didn’t receive private bids, the railways will build a shorter 371 km Sonnagar-New Andal section,” as per the official. DFCCIL, which is responsible for developing freight corridors, has already submitted the revised detailed project report (DPR) for the proposed East-West DFC to the Railway Board for approval. Once the project receives the green signal, the ministry is expected to finalise the bidding model and implementation framework. This strategy will also lead to shorter execution period. The first two dedicated freight corridors — the Eastern and Western DFCs — faced long delays because of slow land acquisition and other implementation hurdles. By awarding multiple sections simultaneously to different concessionaires, the ministry expects work to progress on several stretches at the same time instead of waiting for a single contractor to complete the entire project. Experts said that bundling construction and maintenance is expected to ensure better quality of work and reduce long-term maintenance costs, while giving concessionaires a greater stake in the project’s performance. In April, FE had reported that DFCCIL has started the land acquisition process for the proposed corridor, and the agency is discussing land acquisition and road connectivity for the proposed stations along the corridor with various state governments.