A huge enhancement of railway stations in India through the Amrit Bharat Station Scheme (ABSS) will open a business opportunity worth approximately Rs 30,000 crore for the EPC companies over the next two years. Such a development would not just alter the country’s infrastructure landscape and provide an extremely opportunistic market for EPC companies that look to diversify in business.
Massive Investment in Railway Station Redevelopment
The ABSS is going to focus on transforming the country’s railway stations and create huge business opportunities for EPC contractors in India. The redevelopment program looks to rejuvenate 1,318 railway stations across the nation. Through this, major infrastructure players will be able to tap into a market with significant growth potential estimated at Rs 30,000 crore.
One of the major features of this redevelopment is the huge jump in fund allocation for the project. In FY2023, the railway station redevelopment had a budgetary provision of Rs 2,159 crore which increased to Rs 15,511 crore in FY2025. It means that funds are seriously required for this redevelopment program by the government and resources are going to be available in the near future.
From PPP to EPC Model for Speedy Implementation
The first model under which most of the Railway Station Redevelopment projects were considered was the PPP route, which accounted for nearly 12% of the overall NMP target. The government, however, had very few private sector responses to this model, primarily on account of the pricing restrictions, market risk tied to real estate developments, as well as the relatively insufficient track record of PPP projects in the Indian Railways.
As a consequence, in December 2022, the government highlighted the EPC model for station redevelopment. It will help in making the execution smoother, with more predictability and financial stability from the EPC framework. Resource reallocation under this new model has been one of the factors that have led to an increase in the budgetary allocation for station redevelopment projects.
Thriving Market for EPC Players
This has furthered the opportunity of diversification and risk reduction for EPC companies to venture into this new paradigm of EPC model. According to Vinay Kumar G., Corporate Ratings Sector Head at ICRA, while competition in the traditional infra sectors like roads and buildings remains high, growth opportunities are available through railway station redevelopment, as construction firms can enter a relatively less competitive market.
Over the last couple of years, it has pretty decent competition in terms of redevelopment projects at stations, and on the flip side, the maximum discount rates are around 18%, whereas the median discount is seen hibernating at about 4%. Much of a muchness between these two states, though is a pretty stable, well-predictable market in this regard for the contractors. Indian Railways are very strong counterparties-this kind of cycle of receivables similar to NHAI does cut down the financial risk faced by EPC contractors.
Distribution of Redevelopment Programmes
Redevelopment programmes under ABSS have spread over several states of India. The most striking state among these is the Uttar Pradesh that has accounted for redeveloping stations up to 149 number. Other than Uttar Pradesh the remaining states as Maharashtra (126 stations), West Bengal (94), Gujarat (87), Bihar (86), Rajasthan (82), and Madhya Pradesh (80) too have a considerably high numbers of stations listed.
As of now, groundwork stones have been laid upon more than 553 stations; and over Rs 20,000 crores work on redevelopment of stations has been sanctioned already. Major stations are the key projects sanctioned under EPC mode that include Mumbai (Chhatrapati Shivaji Maharaj Terminal), Ahmedabad, Surat, Prayagraj, Bangalore Cantt, Chennai Egmore, and Secunderabad, while high-profile stations such as New Delhi, Pune, Borivali, Mumbai Central, Thane, and Amritsar are not included in the sanctioned work.
Conclusion
Redevelopment of Railway Stations in India to be a Game-changer; Enormous Business Opportunities for EPC Players across the Country: The projects in hand with a total projected value of Rs 30,000 crore and the shift towards the EPC model has given the construction sector an all-important window to capitalise on these developments. More and more railway stations are coming under renovation. With this scenario, the long-term prospects of EPC contractors are definitely bright. Those who seize this opportunity can help shape the transportation infrastructure of India, while expanding their business horizon.
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For more updates on the latest developments in the Railway sector, check out our article on Indian Railways Boosts Safety with Fog Pass Devices at 19,742 Points