Infrastructure
Stage Set For Disinvestment Of CONCOR As Cabinet Approves 35 year Leasing Of Rail Land For Annual License Fee At 1.5% Of Market Value
India Infrahub
Sep 07, 2022, 06:00 PM | Updated 06:00 PM IST
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The Union Cabinet, chaired by the Prime Minister Narendra Modi, has approved the Ministry of Railway’s proposal to revise the railways’ land policy to implement PM Gati Shakti framework.
The revised land policy of Indian Railways will enable will now allow long term leasing of railway land for cargo related activities for a period up-to 35 years @ 1.5% of market value of land per annum.
Under the new policy framework, existing entities using railway land for cargo terminals will be provided an option to switch to the new policy regime after transparent and competitive bidding process.
The policy is also set to simplify Railways’ land use and Right of Way (ROW) for integrated development of public service utilities like electricity, gas, water supply, sewage disposal, urban transport etc by providing railway land @ 1.5% of market value of land per annum.
The current policy permits licensing of railway land for a short period upto five years for any railway related activity. According to the Railway ministry, the short-term license period does not attract any serious investors for creating multi-modal cargo hubs.
Long term leasing of railway land upto 35 years is allowed for leasing government land mainly to Public Sector Undertakings (PSUs), thereby limiting the scope of investments in cargo terminals.
The policy changes are expected to help in attracting more cargo to railways, increase railways’ modal share in freight transportation thereby reducing logistics cost of the industry.
CONCOR disinvestment
The policy changes are expected to expedite the disinvestment of Container Corporation of India Limited. The Union Cabinet in November 2019 had approved the disinvestment of government's 30.8 per cent shareholding in the company, along with transfer of management control.
The proposed changes will pave way for the privatisation of Concor, because it will help strategic buyers pay much lesser amounts as land rentals to Indian Railways for a longer period. This was one of the key feedback by the investment advisors of Concor.
Concor holds over per cent share in the container train market with a large network of over 80 container terminals spread across the country and a fleet of hundreds of container trains. The 'navratna' public sector unit has runs joint ventures with shipping lines (like Maersk, CMA-CGM, Transworld, AllCargo); and logistics players like Transport Corporation of India and international port terminal operators like APM Terminals and DP World.
In April 2020, the railways notified a and licensing fee regime for industrial use of its land, and extended it to it Concor.Until then, Concor had been paying land lease rentals to the transporter on a per-container (20-feet equivalent unit container) basis, which entailed much lower outgo.
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