The government has made it easier and cheaper for various entities to set up a range of infrastructure on railway land on a long-term lease. These include cargo-related enterprises, public utilities, renewable energy projects, and even schools.
Railway land can now be used to set up solar plants, sewage, and water treatment facilities at Re 1 per square meter per year for 35 years and provide hospitals and schools with Kendriya Vidyalaya Sangathan through PPP. Re 1 per square meter per year can be used for up to 60. years.
The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the new land lease policy of the Railways, which has around 4.84 lakh hectares in India, of which 0.62 lakh hectares are vacant. This includes land that runs parallel to the tracks.
The thrust of the amendment in the policy is to help establish cargo terminals across the railway network. The government wants to encourage a general change of freight transport in the railways to reduce logistics costs and promote competition in the economy.
The establishment of cargo terminals and cargo-related activities on railway land will attract an annual rate of 1.5 percent of the current market value of the land and an annual increase of 6 percent for inflation for 35 years.
This will make it easier for entities like private companies, PSUs, and others to lease railway land for a longer period of up to 35 years, as against the current policy allowing for five years. Sources said the detailed policy is expected soon.
While the policy will apply to future land-lease agreements, officials said those already carrying out cargo-related activities on leased railway land will continue to be governed by the existing policy: with an annual increase of 6 percent. Annual lease fee of 7 percent for the remaining lease term or 35 years.
“In the next five years, more than 300 cargo terminals will come up under the PM Gati Shakti program,” Information and Broadcasting Minister Anurag Thakur said in his briefing on the cabinet decision. “It will create over 1.25 lakh jobs.”
Under the new land policy, the government envisages cargo-related activities to be carried out by any player, be it PSUs, Railways, private players, or existing and future players.
To enable the existing leaseholders at the cargo terminal to migrate to the new policy regime, the government will give them the option to migrate after the expiry of the existing lease agreement. In that case, the player will have the first right of refusal on the respective land.
Renewable power plants, water recycling, and treatment plants should be for the exclusive use of railways, while social infrastructure such as schools and hospitals could be for railway beneficiaries and the public at large.
As one of the key concepts of the Gati Shakti program is to coordinate all infrastructure and utility projects with each other, the government has also simplified the Right of Way policy concerning railway land.
Utilities such as gas, electricity, optic fiber cable, water supply, and sewage disposal through railway land will be allowed by paying a Right of Way charge at 1.5 percent of the land value at 6 percent annual increments for 35 years. Minimum Rs.10,000/-
Private players in the cargo movement business are urging the government to reduce railway land-lease rates. Railway PSU CONCOR is the market leader in the container movement business. So the latest move is also expected to bring clarity to its valuation and clear the way for its disinvestment.
The Railways had given a lot of land on lease to CONCOR to set up its container movement depots across India. The sale of the company’s stake was stuck on the valuation of the land relative to the valuation of the company.