Category Archives: infrastructure

Railways Busy Season Charges withdrawn

PIB release dated 29th April, 2016

Ministry of Railways has decided to withdraw Busy Season Charge levied on all commodities loaded in Covered Stock for two months. This will be applicable from 1st May 2016 to 30th June 2016. This was announced by the Railway Minister Suresh Prabhakar Prabhu in a programme today.

BACKGROUNDER :

• In the Railway Budget for 2016-17,it was declared that a review of tariff policy would be undertaken to evolve a competitive rate structure vis-à-vis other modes, permit multi point loading / unloading and apply differentiated tariffs to increase utilization of alternate routes. It was also stated that the current tariff structure of IR has led to out-pricing of our services in the freight market.

• Keeping in view the above commitment made in the Railway Budget, the following initiatives have already been taken:

1) Allowing Two-point/ Multi point/ Mini Rake loading in all kinds of covered wagons. Earlier there was a restriction on BCN wagons.

2) Minimum distance for Mini Rakes was increased from 400kms to 600kms.

3) Automatic Freight Rebate Scheme in Traditional Empty Flow Direction has been extended.

4) Port Congestion Charge (10% of Base Freight) has been withdrawn.

5) Scheme to attract Merry-go-round System traffic has been introduced.

6) Guidelines for traffic on IR for Coastal Shipping for Iron Ore for Domestic consumption has been allowed.

• Further, in line with the Budget announcement to rationalise the tariff structure, it was decided to review Busy Season Charge of 15%. Industry, various trade associations and field officials have been representing that due to fall in Diesel prices, there has been sharp decline in road rates in the last few years, which has made rail freight highly uncompetitive for customers. In view of the same, after review, it has been decided to withdraw Busy Season Charge levied on all commodities loaded in Covered Stock for two months. This will be applicable from 1st May 2016 to 30th June 2016. As per our existing policy, this charge is not levied during the Lean Season i.e. 1st July to 30th September, which implies that BSC will not be levied effectively till 30th September 2016.

• There will be a reduction of 15% in the Basic freight due to withdrawal of BSC.

• Generally, Cement,Fertilizers and Foodgrains are loaded in Jumbo rakes. Out of these commodities the rail co-efficient of Cement has fallen substantially during the previous years from 50% to 40% and its demand is also highly price elastic and sensitive.

• It is expected that by this policy initiative of withdrawal of Busy Season Charge, there would be a likely increase in loading by around 6-7MT, which will more than compensate the financial loss due withdrawal of this surcharge).

 

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Railways withdraws levy of port congestion surcharge

PIB press release dated 15th April, 2016

Indian Railways is moving ahead with big bang reforms as announced in the Railway Budget.

In order to attract imported freight traffic including Containers, Coal, Iron ore etc (diverted to road), it has been decided to withdraw the levy of Port Congestion Surcharge with immediate effect. This was a pending demand of the Ministries of Shipping and Ports, Steel, Container Operators and other Industries.       The move will be a big boost to national industrial growth.
The surcharge withdrawn was 10% on basic freight and it’s withdrawal will generate additional  incremental traffic.

 

BACKGROUNDER :

 

Due to the prevailing economic situation during the later part of the FY 2014-15, there had been a burgeoning growth of import traffic at ports, particularly of iron ore, thermal coal, fertilizer and containers. In order to compensate for the additional detention to railway rolling stock at the ports and the consequential loss of loading potential of revenue earning freight traffic, it had been decided to impose congestion surcharge of 10% on base freight on all traffic including containers originating from ports with effect from 24.11.2014.

 

The situation has since changed with the congestion levels at almost all ports having come down due to a significant drop in import of thermal coal, iron ore, fertilizer and container traffic in recent months. The pendency of demands at ports has come down drastically prompting Railways to withdraw the port congestion surcharge with immediate effect.

Over the past few months, there had been a persistent demand from the Industry and concerned nodal Ministries to consider withdrawal of the 10%congestion surcharge on the grounds that it was having a very significant impact in the logistics cost and was leading to diversion of traffic from the more environmental friendly rail mode to road, also precipitated because of falling prices of diesel.

 

The withdrawal is expected to give respite to the Industry in bringing down logistics costs and thereby attract increasing volumes of traffic to the rail mode, particularly in the major segments of imported thermal and coking coal for the power sector and steel plants, imported bauxite and alumina for the Aluminum Industry, import container traffic movement from gateway ports to the hinterland, imported fertilizers, imported limestone and dolomite for the steel plants etc.

 

The decision to withdraw the congestion surcharge is one of the significant steps in the direction of rationalization of freight rate structure announced by the Hon’ble Minister of Railways in this year’s Railway Budget.  Besides this, three other policy initiatives have already been launched by Ministry of Railways in accordance with the budget announcements. These are (i) opening of loading of BCN rakes for two point destinations; (ii) incentive scheme for merry-go-round operations by Railways in colliery – power plant circuits and (iii) policy on coastal movement of iron ore, involving combination of rail cum sea movements, for steel plants located on west coast. All these policy initiatives are expected to contribute to significant increase in freight traffic and corresponding earnings during the current fiscal.

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