Redevelopment Of Rly Stations Opens Rs 30k Cr Biz Opportunities

New Delhi: The redevelopment of India’s railway stations is expected to open up business opportunities worth Rs30,000 crore for engineering, procurement, and construction (EPC) players over the next two years, according to an ICRA report released on Monday.

A total of 1,318 railway stations are being considered for redevelopment under the Amrit Bharat Station Scheme (ABSS). The government has increased the budgetary allocation by more than seven times from Rs2,159 crore in FY2023 to Rs15,511 crore in FY2025 Budget Estimates (BE) of Indian Railways for the redevelopment of railway stations.

This allocation is expected to remain at healthy levels in the medium term, the report states. Earlier, the Government of India had envisaged the majority of the station redevelopment projects under the Public-Private-Partnership (PPP) mode, which accounted for around 12 per cent of the National Monetisation Pipeline (NMP) target.

However, with limited participation in the PPP mode owing to restrictions on pricing, market risk related to real estate development and limited track record of PPP projects in railways, the government reallocated station redevelopment work on the EPC mode in December 2022. This has resulted in the increased budgetary allocation.

ICRA’s sector head, Corporate Ratings, Vinay Kumar G. said: “The competition, in traditional segments like roads and buildings, remains elevated and hence the railway station redevelopment provides business opportunities estimated at Rs30,000 crore for construction companies to grow and derisk their businesses through diversification.”

“The station redevelopment project awards witnessed moderate competition in the past two years, reflecting maximum discounts of up to 18 per cent and a median discount of up to 4 per cent and have been similar to other railway EPC projects where the median discount is up to 5 per cent. Indian Railways, being a strong counterparty, the receivable cycle is also expected to remain low and comparable to that of the NHAI,” he added.