Industry structure

How is the rail transport industry generally structured in your country?

Under the Constitution of India, legislative authority with respect to rail transport vests exclusively in the Parliament. In exercise of this legislative power, Parliament enacted the Railways Act 1989 (the Railways Act), which consolidates the laws relating to the rail transport industry in India, including rail infrastructure and rail operations.

In India railways are categorised as government railways (ie, those owned by the government) and non-government railways. After nationalisation in 1951-1953, all private railway companies ceased to exist and form part of the Indian Railways. Indian Railways is the generic term used to refer to the network of railway infrastructure and services, and is a departmental undertaking of the government.

The executive authority of the Indian Railways is exercised by the Ministry of Railways (MOR) with respect to government and non-government railways. The powers and functions of the MOR under the Railways Act are vested in the Railway Board, which is responsible for all infrastructure and operations of trains, provisioning of rolling stock and its maintenance, and formulation of all related planning and policies, issuance of instructions and guidelines regarding administration, safety, maintenance procedure and schedules, among others.

The Railway Board comprises the chairman and six other board members, namely the Financial Commissioner, Member Engineering, Member Electrical, Member Mechanical, Member Staff and Member Traffic. For administrative convenience, Indian Railways is further divided into different zones. At present there are 16 zonal railways each headed by a general manager who reports to the Railway Board. The general superintendence of a zonal railway rests with its general manager.

Additionally, there are a number of public-sector undertakings under the administrative control of the government that undertake various activities in relation to rail transport (eg, Container Corporation of India Limited (CONCOR) operates rail freight services; Rail Vikas Nigam Limited undertakes development and implementation of projects; Dedicated Freight Corridors Corporation of India Limited procures and operates selected new dedicated freight corridors).

Ownership and control

Does the government of your country have an ownership interest in any rail transport companies or another direct role in providing rail transport services?

Railway operations have been primarily reserved for the public sector, except for the construction, operation and maintenance of the following:

  • suburban corridor projects through public-private partnerships (PPPs);
  • high-speed train projects;
  • dedicated freight lines;
  • rolling stock including train sets, and locomotives or coach manufacturing and maintenance facilities;
  • railway electrification;
  • signalling systems;
  • freight terminals;
  • passenger terminals;
  • infrastructure in industrial parks pertaining to a railway line or sidings, including electrified railway lines and connectivity to a main railway line; and
  • mass rapid transport systems.

As noted in question 1, Indian Railways is responsible for the majority of rail transport development and operations in India. However, the government has established entities under its administrative control that undertake various activities in relation to rail transport.

Are freight and passenger operations typically controlled by separate companies?

No, freight and passenger operations are not controlled by separate entities. Indian Railways operates both passenger operations and the bulk of freight operations. Even in the case of certain entities incorporated by the government, such as CONCOR, the operations are controlled by Indian Railways.

Regulatory bodies

Which bodies regulate rail transport in your country, and under what basic laws?

The MOR regulates rail transport and, as mentioned in question 1, the powers and functions of the MOR under the Railways Act are vested in the Railway Board, which issues directions and guidelines for the rail sector in India.

Market entry

Regulatory approval

Is regulatory approval necessary to enter the market as a rail transport provider? What is the procedure for obtaining approval?

The market can be entered through domestic or foreign investments in railway projects (eg, PPP projects). According to the Sectoral Guidelines for Domestic/Foreign Direct Investment in Railways issued by the MOR, up to 100 per cent investment has been allowed in construction, operation and maintenance of, inter alia, high-speed train projects, dedicated freight lines and passenger terminals.

In projects where Indian Railways or any other railway entity (see question 2) is selecting entities pursuant to a bidding process, Indian Railways can provide additional conditions for formation of joint ventures. Certain project proposals for investments are required to be submitted to the Railway Board by the investor along with a brief concept note including the objective, scope, benefits, market potential, tentative project cost, probable financing options, pricing and economics, which the Railway Board will consider. If there is 100 per cent foreign direct investment (FDI) in rail infrastructure, it will be cleared through the automatic route (ie, prior approval is not necessary), which means no approval from the Foreign Investment Promotion Board is required. However, proposals involving FDI in sensitive areas (ie, regions where security is an issue) that exceeds 49 per cent would have to be brought by the MOR before the Cabinet Committee on Security for consideration.

In addition to the above-mentioned guidelines, the government also introduced a policy on participative models for rail connectivity and capacity augmentation in 2012 with respect to private participation and non-government railways. For projects developed as joint ventures under the Participative Policy of 2012, ‘in-principle approval’ will be granted by the Railway Board.

Is regulatory approval necessary to acquire control of an existing rail transport provider? What is the procedure for obtaining approval?

See question 5.

Is special approval required for rail transport companies to be owned or controlled by foreign entities?

Rail transport is primarily vested with Indian Railways. However, there are indications that Indian Railways will soon allow private companies to run freight trains from their own private terminals. These freight trains are being considered for sectors such as cement, steel, automotive, logistics, grains, chemicals and fertilisers.

Certain rail sectors in which private participation is permitted are listed below. Up to 100 per cent foreign investment is permitted under the automatic route to undertake construction, operation and maintenance in the sectors listed in question 2.

To increase private-sector participation, Indian Railways introduced the Wagon Investment Scheme (WIS) to encourage PPPs in procurement of wagons to meet the future growth of traffic. Investors were free to procure even general-purpose wagons and there was no restriction on the commodities that could be transported.

Is regulatory approval necessary to construct a new rail line? What is the procedure for obtaining approval?

Any new rail line or rail infrastructure related to transporting passengers or freight will have to be approved by the Railway Board prior to any activity, including construction. Further, even in the areas where private participation has increased in rail transport and operations, private companies will have to comply with section 21 of the Railways Act, which stipulates that no railway shall be opened for the public carriage of passengers until the government has, by order, sanctioned it to be opened for that purpose.

In respect of all new lines and gauge conversion projects worth more than 3 billion rupees, a memorandum for the Expanded Board for Railways (EBR) has to be prepared that details the financial scheduling of the project, pursuant to which the project is planned and vetted by the Railway Board. After this approval, the project report is sent to the Project Appraisal and Management Division (PAMD) of the Ministry of Finance. On approval of the EBR, the memorandum is prepared and must be approved by the Union Cabinet (through the Cabinet Committee on Economic Affairs (CCEA)). After a project is approved by the CCEA, it is included in the Railways Works Programme and a fund is allotted for carrying out preliminary works during the year.

Market exit

Discontinuing a service

What laws govern a rail transport company’s ability to voluntarily discontinue service or to remove rail infrastructure over a particular route?

The Railway Act governs the discontinuation of services for passenger transport.

On what grounds, and what is the procedure, for the government or a third party to force a rail transport provider to discontinue service over a particular route or to withdraw a rail transport provider’s authorisation to operate? What measures are available for the authorisation holder to challenge the withdrawal of its authorisation to operate?

In terms of the Railways Act, only the government is empowered to undertake rail transport services and any temporary suspension of traffic, or to close a railway opened for public carriage of passengers if, in the opinion of the Commissioner of Railway Safety, there are safety concerns for passengers in continuing operations of the particular rail line.


Are there sector-specific rules that govern the insolvency of rail transport providers, or do general insolvency rules apply? Must a rail transport provider continue providing service during insolvency?

The companies operating non-governmental railways are subject to the general insolvency rules of the Insolvency and Bankruptcy Code 2016.

Competition law

Competition rules

Do general and sector-specific competition rules apply to rail transport?

There are no sector-specific competition rules applicable to rail transport - the general rules of the Competition Act 2002 apply. Further, India Railways falls under the jurisdiction of the Competition Commission of India (CCI) and, therefore, the CCI is empowered to hear complaints with respect to alleged abuse of dominant position in the rail transport sector (Union of India v Competition Commission of India, AIR 2012 Del 66, Delhi High Court).

Regulator competition responsibilities

Does the sector-specific regulator have any responsibility for enforcing competition law?

There is no sector-specific regulator for rail transport in India (in contrast to regulators in the petroleum and natural gas, and telecoms sectors), and as such, the competition law aspects of the industry fall under the jurisdiction of the CCI.

Competition assessments

What are the main standards for assessing the competitive effect of a transaction involving rail transport companies?

The main standards for assessing the competitive effect of a transaction are provided under the Competition Act 2002, and are the following: entering into agreements that have an adverse effect on competition in India, and abuse of dominant position leading to unfair or discriminatory practices.

Price regulation

Types of regulation

Are the prices charged by rail carriers for freight transport regulated? How?

Pursuant to section 30 of the Railways Act, the government is empowered to fix rates - for the carriage of passengers and goods - for the whole or any part of the railway. Different rates may be fixed for different classes of goods, and the government may specify the conditions subject to which such rates would be applicable. Further, the government may also fix the rates of any other charges incidental to or connected with such carriage (including demurrage and wharfage).

Are the prices charged by rail carriers for passenger transport regulated? How?

See question 15.

Is there a procedure for freight shippers or passengers to challenge price levels? Who adjudicates those challenges, and what rules apply?

Complaints may be made to the Railway Rates Tribunal, which was constituted pursuant to section 33 of the Railways Act, if they relate to a rail transport company:

  • making or giving any undue or unreasonable preference or advantage to, or in favour of, any particular person or description of traffic in the carriage of goods;
  • charging an unreasonable rate for the carriage of any commodity between two stations; or
  • levying any other charge that is unreasonable.

The powers of the Railway Rates Tribunal and the manner in which it adjudicates cases are set out in Chapter VII of the Railways Act.

Must rail transport companies charge similar prices to all shippers and passengers who are requesting similar service?

The Railways Act prohibits undue or unreasonable preference or advantage to, or in favour of, any person or any particular description of traffic in the carriage of goods.

The Railways Act further provides that, whenever it is shown that a railway administration charges one trader or class of traders or the traders in any local area, lower rates for the same or similar goods, or lower charges for the same or similar services than it charges to other traders in any other local area, the burden of proving that the lower rate or charge does not amount to an undue preference rests upon the railway administration.

Network access

Sharing access with other companies

Must entities controlling rail infrastructure grant network access to other rail transport companies? Are there exceptions or restrictions?

With regard to freight transport, network access may be provided to private container operators. Upon such access being provided, the private container operators will be responsible for the custody and security of containers, as well as for cargo on the ground awaiting loading, unloading, removal, stuffing or destuffing.

Access pricing

Are the prices for granting of network access regulated? How?

The prices for granting network access are regulated for the movement of freight. Further, the freight rail terminal operators can also impose certain charges for haulage, terminal access, detention for containers and wagons, ground usage, etc.

Competitor access

Is there a declared policy on allowing new market entrants network access or increasing competition in rail transport? What is it?


Service standards

Service delivery

Must rail transport providers serve all customers who request service? Are there exceptions or restrictions?

Indian Railways should provide services to the general public without any restrictions; however, it is subject to the conditions under the Railways Act. The Act provides that any person that wishes to travel on a railway shall, upon payment of the fare, be supplied with a ticket by a railway servant (a government employee), a member of rail staff or an agent authorised in this regard. However, the tickets are issued subject to the condition of availability of accommodation in the class of carriage and the train for which the ticket is issued. Further, section 56 of the Railways Act provides that a person suffering from a contagious or infectious disease is restricted from boarding or remaining in any carriage on a train, or to travel on a train, without the permission of a government employee or member of rail staff.

Section 70 of the Railways Act prohibits undue or unreasonable preference or advantage to, or in favour of, any person or any particular description of traffic in the carriage of goods. Pursuant to section 68 of the Railways Act, a railway company can also refuse to carry any animal suffering from a contagious or infectious disease. Private entities operating rail port connectivity projects or those projects in which the MOR has shares generally provide freight transport and can refuse service to their customers.

Are there legal or regulatory service standards that rail transport companies are required to meet?

The government recently approved the formation of a Rail Development Authority, which will be responsible for, among other things, protecting consumer interests by ensuring quality of service and cost optimisation; benchmarking service standards against international norms; specifying and enforcing standards with respect to the quality, continuity and reliability of services provided; and suggesting measures to incorporate new technologies for achieving desired efficiency and performance standards.

Further, rail transport companies are required to meet various service standards laid down in codes and manuals issued by the MOR (these standards relate to passenger amenities, catering and vending services (Indian Railway Catering and Tourism Corporation), transport of goods and materials, etc) and in case of any deficiency of services the claims can be raised under the Railways Act or in a consumer court. The service standards are laid down for different purposes by the MOR. For instance, rail transport companies are required to abide by the Manual for Standards and Specification of Railway Stations issued by the MOR.

Challenging service

Is there a procedure for freight shippers or passengers to challenge the quality of service they receive? Who adjudicates those challenges, and what rules apply?

Yes, freight shippers or passengers can challenge the quality of service they receive. The Department of Administrative Reforms and Public Grievances administers a public grievance portal where a citizen can register his or her grievance pertaining to any central government department or ministry, including the MOR, and any subdepartments under a ministry.

Additionally, a railway claims tribunal has been instituted under the Railway Claims Tribunal Act 1987 for inquiring into and determining claims against a railway administration for loss, destruction, damage, deterioration or non-delivery of animals or goods entrusted to it, or for the refund of fares or freight, or for compensation for death or injury to passengers occurring as a result of railways accidents. The procedure for discharging claims has been provided under the Railway Claims Tribunal Act 1987.

Safety regulation

Types of regulation

How is rail safety regulated?

The Commissioner of Railway Safety, appointed by the government and working under the Ministry of Civil Aviation, is responsible for, among other things:

  • inspecting any railway with a view to determining whether it is fit to be opened for the public carriage of passengers, and submit a report in this regard to the government;
  • making such periodical or other inspections of any railway or of any rolling stock used on the railway as the government may direct; and
  • making an inquiry into the cause of any accident on a railway.

Competent body

What body has responsibility for regulating rail safety?

The Commissioner of Railway Safety deals with matters pertaining to safety of rail travel and train operation, and is charged with certain statutory functions as laid down in the Railways Act, which are of an inspectorial, investigatory and advisory nature.

The Railway Board, as the safety authority, and the zonal railway administrations frame rules, regulations, instructions, manuals and records relating to safety of train operations. These manuals and other publications are used by the commissioners of railway safety during the course of their functional duties.

Manufacturing regulations

What safety regulations apply to the manufacture of rail equipment?

Safety regulations are the responsibility of the Research Design and Standards Organisation (RDSO), which operates under the MOR. The RDSO’s functions include inspection of critical and safety items of rolling stock, locomotives, signalling and telecommunications equipment, and track components.

Maintenance rules

What rules regulate the maintenance of track and other rail infrastructure?

The MOR issued the Manual for Standards and Specifications for Railway Stations in 2009 and a policy manual. These contain the standards required for tracks and platforms and other rail infrastructure.

What specific rules regulate the maintenance of rail equipment?

The Operating Manual for Indian Railways issued by the MOR is a highly detailed handbook for operation and maintenance of rail equipment, and contains, for example, the Wagon Maintenance Manual and Maintenance Manuels WDG3A, WDS and WDM on diesel locomotives.

Accident investigations

What systems and procedures are in place for the investigation of rail accidents?

The provisions of Chapter XII of the Railways Act deals with rail accidents and the Statutory Investigations into Railway Accidents Rules 1998 are in place under the Railways Act for investigation of rail accidents.

Accident liability

Are there any special rules about the liability of rail transport companies for rail accidents, or does the ordinary liability regime apply?

There are special rules and special procedures that are provided under the Railways Act as well under the Railways Claims Tribunal Act 1987. Chapter XII of the Railways Act provides detailed provisions with regard to rail accidents and Chapter XIII of the Act deals with the liability of the railway administration for death and injury to passengers as a result of accidents.

Special rules deal with the liability of rail transport companies for rail accidents in addition to the ordinary liability regime, including the following:

  • the Rules for the guidance of the Officers of the Commission of Railway Safety for holding inquiries into railway accidents are contained in the Statutory Investigation into Railway Accidents Rules 1998;
  • the Railways (Notice of and Inquiries into Accidents) Rules 1998 as amended in 2013; and
  • the Railways Passengers (Manner of investigation of untoward incidents) Rules 2003 issued under the Railways Act.

A statutory inquiry by the Commissioner is obligatory for every accident in relation to a passenger train that results in grievous hurt or loss of human life as defined in the Indian Penal Code (

Financial support

Government support

Does the government or government-controlled entities provide direct or indirect financial support to rail transport companies? What is the nature of such support (eg, loans, direct financial subsidies, or other forms of support)?

The government provides direct financial support to the railways by allocating a fixed amount in the budget. Investments made or that are due to be made by the government in railway infrastructure are treated as loans.

The Indian Railway Finance Corporation (IRFC) is the financing arm of Indian Railways for mobilising funds from domestic as well as overseas capital markets in order to fund the rolling stock requirements.

Additionally, rail transport companies can receive financial support from FDI (see question 7). Foreign investment in the rail transport industry from April 2000 to December 2017 was US$897.09 million (

Requesting support

Are there sector-specific rules governing financial support to rail transport companies and is there a formal process to request such support or to challenge a grant of financial support?

The Indian Railway Financial Code issued by the MOR serves as a compendium of general rules and orders on financial matters, including a summary of the annual budget. The Code deals with various important aspects of financial management, such as project appraisal, budget formulation, reporting and control, parliamentary financial control, award of contract, allocation of expenditure, rules relating to inter-railway and interdepartmental services, contingent expenses and investigation of losses.

The IRFC follows a lease-cum-licence arrangement for financing of railway projects in which the IRFC acquires a leasehold interest in the project under a lease agreement with the MOR (yet to be executed). The IRFC also raises funds from Life Insurance Corporation of India for financing railway projects. Further, financial assistance is allocated through a bidding and tender process.

Labour regulation

Applicable labour and employment laws

Are there specialised labour or employment laws that apply to workers in the rail transport industry, or do standard labour and employment laws apply?

Specialised labour and employment laws apply to the rail transport industry regarding hours of work and periods of rest for workers, in the form of Chapter XIV of the Railways Act and the Railway Servants (Hours of Work and Period of Rest) Rules 2005. Further, the Railway Services (Conduct) Rules 1966 regulate the employment and terms of employment of railway employees.

The rail transport industry is also subject to the general labour laws of India (pertaining to minimum wage, use of child labour, industrial disputes, etc).

Environmental regulation

Applicable environmental laws

Are there specialised environmental laws that apply to rail transport companies, or do standard environmental laws apply?

Standard environmental laws apply to rail transport companies. However, there are exceptions that apply when obtaining approvals for railway and metro projects.

Update and trends

Update and trends

Are there any emerging trends or hot topics in your jurisdiction?

Key trends and recent updates concerning rail transport

  • Private sector participation is being encouraged and Indian Railways has recently considered inviting bids from foreign companies through a global tender worth 25 billion rupees for the supply of long rails.
  • Indian Railways is considering using artificial intelligence to manage track maintenance blocks.
  • Indian Railways has recently introduced commercial service to run double-stack dwarf containers on trains to capture lost traffic through a new delivery model for domestic cargo.
  • Proposed amendments to the Specific Relief Act 1963 seek to do the following:
  • ensure that courts direct parties to perform their contractual obligations as the norm rather than as an exception (as is currently the case);
  • give the party whose contract has not been performed by the other party the option to arrange for performance of the contract by a third party or by his or her own agency (substituted performance) at the cost of that other party - though once the contract is performed, specific performance cannot be claimed;
  • prevent courts from granting injunctions in contracts related to infrastructure projects, if such an injunction would hinder or delay the completion of the project;
  • have the government designate special courts to deal with cases related to infrastructure projects. Such cases must be disposed of in 12 months. Notably, infrastructure projects cover ‘railway track, tunnels, viaducts, bridges, terminal infrastructure, including stations and adjoining commercial infrastructure’; and
  • engage technical experts in cases where an expert opinion may be needed at the cost of the parties.

The proposed amendments, upon coming into effect, will have a positive impact on all contracts, and more specifically on the infrastructure sector, including rail transport.

Formation of the Rail Development Authority

The government has approved the formation of the Rail Development Authority (RDA), which will be responsible for:

  • pricing of services commensurate with costs;
  • suggesting measures for enhancement of non-fare revenue;
  • protecting consumer interests by ensuring quality of service and cost optimisation;
  • promoting competition, efficiency and economy;
  • encouraging market development and participation of stakeholders in the rail sector and ensuring a fair deal to the stakeholders and customers;
  • creating a positive environment for investment;
  • promoting efficient allocation of resources in the sector;
  • benchmarking of service standards against international norms, and specifying and enforcing standards with respect to the quality, continuity and reliability of services provided by them;
  • providing a framework for non-discriminatory open access to the dedicated freight corridor infrastructure and others in future;
  • suggesting measures to absorb new technologies for achieving desired efficiency and performance standards; and
  • suggesting measures for human resource development to achieve stated objectives.