Indian Railways Plans 15% Increase in Capex to ₹3 Lakh Crore for FY27

As per a news report, Indian Railways, one of the world’s largest railway networks, is gearing up for a substantial increase in its capital expenditure (capex) for the fiscal year 2027 (FY27). According to a recent news report, the capex allocation is expected to rise by 15% to over ₹3 lakh crore, marking a significant milestone in the country’s rail infrastructure development. This increase comes after a flat capex allocation for FY26, which stood at ₹2.62 lakh crore. With the country’s economic growth and demand for enhanced transportation infrastructure, Indian Railways is focusing on a wide range of initiatives aimed at modernisation, safety, and network expansion.

Reasons for the Capex Increase

As per the report, several factors contribute to the expected rise in capital expenditure for Indian Railways. The FY26 allocation remained flat due to political and fiscal constraints. The government had to ease tax policies to boost consumption, including exemptions on income tax up to ₹12 lakh. However, the Indian government has emphasised reducing logistics costs as a primary goal, necessitating the expansion of the rail network and modernisation of existing systems.

The significant increase in the capex will primarily focus on four key areas: network infrastructure, rolling stock, safety improvements, and station redevelopment. These areas are essential for the development of a world-class rail system that can cater to both domestic and international demands.

Key Areas of Investment

1. Network Infrastructure and Rolling Stock Expansion

One of the largest investments will be directed towards enhancing the rail network, including the expansion of tracks, new lines, and increased rolling stock. Rolling stock includes locomotives, coaches, and wagons, all of which are essential for improving the efficiency and capacity of the rail network.

For example, the production of coaches has grown significantly, from 3,731 coaches in FY13 to 6,550 in FY24, with plans to ramp up production to 8,000 per year. Similarly, the production of wagons has tripled over the past decade, with plans to manufacture over 30,000 wagons annually. This expansion will help the Indian Railways meet the growing demand for passenger and freight transportation.

2. Safety Upgrades and Technology Implementation

Passenger safety remains a top priority for Indian Railways. To this end, the railway is working on rolling out advanced safety features such as the Kavach system, an indigenously developed automatic train protection system. The next phase of Kavach will require substantial investments, especially for equipping 10,000 locomotives with the system and implementing track-side works for 15,000 route kilometres.

The Indian Railways has already awarded contracts for 1,865 route kilometres and plans to continue the work at a rapid pace. The system will help prevent accidents caused by human error and improve overall safety across the network.

3. Modernisation Projects: Bullet Trains and More

In addition to traditional railway development, the Indian Railways is working on futuristic transportation technologies, including bullet trains, hydrogen-powered trains, and the Hyperloop system. These projects are expected to gain momentum from FY26 onwards and will serve as critical components of the country’s transport infrastructure in the coming years. The government has recognised that the success of these initiatives will not only modernise Indian Railways but will also contribute significantly to the country’s long-term economic growth.

Future Outlook

With the 15% increase in capex for FY27, Indian Railways is well-positioned to meet the growing demands of the country’s transportation network. The expansion of infrastructure, adoption of new technologies, and focus on passenger safety are critical steps in transforming the Indian Railways into a modern, world-class service provider. As the railways continue to modernise, they will play a key role in driving down logistics costs and contributing to the overall efficiency of the Indian economy.

Conclusion

Indian Railways’ substantial increase in capex in FY27 reflects the government’s commitment to modernising the country’s rail network. With a focus on network expansion, rolling stock, safety, and new technology initiatives, the railway sector is set to undergo significant transformations that will benefit millions of passengers and contribute to India’s long-term growth.

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