Punjab own freight trains will minimise freight burden, improve industry competitiveness

Punjab own freight trains will minimise freight burden, improve industry competitiveness

The Rising Panjab Bureau

Addressing industrialists, on August 27, in a conference “Vision Punjab” organised by Industry Chamber-ASSOCHAM (Associated Chambers of Commerce and Industry of India) and state government, Punjab Chief Minister Bhagwant Mann said that Punjab will be the first state in the country to have its own freight trains to transport export goods to ports and to bring imported goods from the ports to the state. 

As per the plan conceived by the state government, it is planning to buying three trains with rakes to transport goods. It is estimated that each train will cost around Rs 350 crore. As far financing is concerned, the state will take up the issue with Indian Railways which offers a scheme under which the state can avail loan at a concessional rate of interest of three per cent.

If it happens, it will not only boost exports from the state as it is likely to bring down the transportation cost by 50 per cent but would also enhance unlimited job opportunities in the private sector.

It is worth noting that Punjab manufacturers face a double freight burden — first they pay to access dry ports and then, dry to seaports. It has forced them either to shift base or shut operations.

According to ASSOCHAM, additionally, Seaports play a crucial role in reducing domestic logistic costs and facilitating Exim-oriented manufacturing by reducing time and variability. logistically, Punjab’s main hinterland is at an average distance of 1,300km from (the ICD Ludhiana to Mundra), which is the main reason why logistic cost on export and import is about three times higher than that in southern and western coastal line states.

Therefore, the state manufacturing sector needs a level playing field to compete with manufacturing industrial clusters of southern and western coastal line states, which reap the benefits of near-port location. So, the government must own freight trains (either solely or in PPP mode) to boost the state industry by minimising rail freight burden from dry ports to seaports and vice versa.

According to A S Mittal, Chairman, ASSOCHAM, North Region Development Council and Vice Chairman, International Tractors Ltd, freight train will strengthen and promote the MSMEs which are instrumental in creating local entrepreneurship and employment. Secondly, as an agrarian state, Punjab has a long way to go in developing effective processing units to prevent crop wastage, improve supply chain, marketing, and logistics. Increasing production and export are correlated and hence state-owned freight trains will help in addressing these structural constraints in the export realm and transform the manufacturing sector into export engines for its economic growth.

The reduction in logistics costs could be a key enabler in enhancing the competitiveness of all sectors of the state economy and boost exports from the state such as hosiery, apparels, basmati, tractors, sports goods, hand tools and engineering goods.