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Rail Ministry Drafts Game-Changing ‘Cement-Style’ Freight Policy for Automobiles and Steel Industry

 

The Indian Railways is quietly working on one of the biggest freight tariff reforms in decades – a uniform “cement-style” freight policy that could soon apply to automobiles, steel, and other key commodities. Inspired by the highly successful Bulk Cement Terminal Policy, the new structure is likely to introduce a flat ₹0.90 per gross tonne kilometre (GTKM) rate, replacing the complicated slab-based and per-wagon charging system currently used for automobile traffic.

If implemented, this single move could make rail freight far more competitive against road transport, bring down logistics costs for manufacturers, and give India a big push toward its net-zero carbon emission targets.

Why the Current System is Holding Back Rail Freight

Right now, automobile freight on Indian Railways is charged on a per-wagon basis with distance slabs. While this looks simple on paper, it creates massive “jump” costs the moment a consignment crosses a slab boundary. Industry insiders point out that a shipment that is just 10–20 km over a slab limit can suddenly become 15–25% more expensive overnight.

The result? Many automakers and logistics planners prefer the flexibility (and often lower effective cost) of road transport, even for long-haul movements. Rail’s share in finished vehicle transportation and certain steel products has remained stubbornly low because of this pricing unpredictability.

What the New “Cement-Style” Policy Will Change

The proposed policy borrows directly from the bulk cement model that has been in place for years:

  • A uniform flat rate of around ₹0.90 per GTKM (exact quantum may be fine-tuned)
  • No slab jumps – cost increases linearly with every additional kilometre
  • Charging based on actual gross tonne kilometre instead of fixed per-wagon slabs

This linear, transparent structure removes the fear of sudden cost spikes and makes budgeting extremely predictable for shippers.

For the automobile sector, the shift from per-wagon to per GTKM charging is especially significant. A loaded NMG (New Modified Goods) rake carrying 270–300 cars will now have a cost that scales smoothly with distance rather than jumping at arbitrary thresholds.

Steel producers moving finished products (coils, sheets, TMT bars, etc.) are also expected to benefit from the same rationalised structure.

Real Benefits for Industry and the Environment

  1. Predictable Logistics Costs Automakers like Maruti Suzuki, Tata Motors, Hyundai, Mahindra and steel giants such as JSW, Tata Steel and SAIL will finally be able to forecast freight expenses with near-perfect accuracy – a critical factor when planning new plants, pricing vehicles, or negotiating with component suppliers.
  2. Higher Rail Modal Share Removing slab penalties directly attacks the biggest reason companies choose highways over railways. A smoother cost curve is expected to trigger a noticeable shift of finished vehicles and steel from road to rail.
  3. Lower Carbon Footprint Rail freight emits roughly 75–80% less CO₂ per tonne-km compared to trucks. A policy that incentivises higher rail usage will directly support India’s commitment to reach net-zero carbon emissions by 2070 and the more immediate target of reducing logistics-related emissions.
  4. Infrastructure Utilisation Dedicated freight corridors (DFCs) are coming online rapidly. The new tariff will help Indian Railways fill these high-speed, high-capacity corridors with steady automobile and steel traffic instead of seeing them under-utilised.

When Can We Expect the New Policy?

While the Railway Board is still in the drafting and stakeholder consultation phase, sources indicate that the ministry wants to roll out the new structure within the current financial year or by April 2026 at the latest. Once the automobile and steel policy is notified, other commodities currently facing similar slab distortions may also be brought under the same rationalised framework.

The Bottom Line

The proposed ₹0.90 per GTKM flat rate, modelled on the cement policy, has the potential to be a turning point for India’s freight ecosystem. By eliminating artificial cost jumps and introducing true distance-based linearity, the Rail Ministry is removing the biggest pricing hurdle that has kept automobiles and steel on the road for decades.

For manufacturers, it means lower and more predictable logistics costs. For the environment, it means millions of tonnes of CO₂ saved every year. And for Indian Railways, it means higher volumes, better asset utilisation, and a stronger role in India’s economic growth story.

As the policy moves from draft to reality, every automaker, steel producer, and logistics planner in the country will be watching closely – because this could be the reform that finally tips the balance decisively in favour of rail.

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