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Railway station redevelopment to offer Rs 30,000 crore business opportunities for EPC players: ICRA

24 Dec 2024 Evaluate

Credit rating agency ICRA in its latest report has said that redevelopment of India's railway stations is likely to offer business opportunities worth Rs 30,000 crore for engineering, procurement, and construction entities (EPC) players over the next two years. A total of 1,318 railway stations by the Indian Railways are being considered for redevelopment under the Amrit Bharat Station Scheme (ABSS). 

The report said earlier, the Government of India (GoI) had envisaged majority of the station redevelopment projects under the Public-Private-Partnership (PPP) mode, which accounted for around 12% for the National Monetisation Pipeline (NMP) target. However, with limited participation in the PPP mode owing to restrictions on pricing, market risk related to real estate development and limited track record of PPP projects in railways, the government reallocated station redevelopment work on the EPC mode in December 2022. To support this, the budgetary allocation increased by more than seven times from Rs 2159 crore in FY23 to Rs 15,511 crore in FY25 Budget Estimates (BE) and is expected to remain at healthy levels in the medium term.

According to the report, the competition, in traditional segments like roads and buildings, remains elevated and hence the railway station redevelopment provides business opportunities estimated at Rs 30,000 crore for construction companies to grow and derisk their businesses through diversification. The station redevelopment project awards witnessed moderate competition in the past two years, reflecting maximum discounts of up to 18% and a median discount of up to 4% and have been similar to other railway EPC projects where the median discount is up to 5%. Indian Railways, being a strong counterparty, the receivable cycle is also expected to remain low and comparable to that of the NHAI.


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