Union Cabinet, on Wednesday, approved the policy on long-term leasing of Railway land for the implementation of the PM Gati Shakti framework. The policy will bring more revenue to the Railways with an employment generation potential of about 1.2 lakh jobs.

“Union Cabinet has approved policy on long-term leasing of Railways’ Land to implement PM Gati Shakti framework. 300 cargo terminals will be developed in 5 years,” said Union Minister Anurag Thakur disclosing the Cabinet decisions.

In this much-awaited decision amending the Railway Land Policy, the Cabinet lowered the railway land license fee (LLF) from 6 percent to 1.5 percent. It also raised the lease period from 5 years to 35 years.

Thakur said, “No additional expenditure will be incurred. Liberalizing the land leasing policy would open avenues for all stakeholders/service providers/operators to establish more cargo-related facilities and render their participation assisting in the generation of additional cargo traffic and freight revenues to Railways.”

The move will also make the privatization of Container Corporation of India (CONCOR) more attractive. Interested investors in CONCOR had earlier conveyed to the government that the land licensing fee was very high. They also urged the government to increase the lease tenure.

The latest move will help strategic buyers pay much lesser amounts as land rentals to Indian Railways for a longer period. This was one of the key suggestions by the investment advisors of CONCOR.

The official statement released on Wednesday said the revised Railways Land Policy will enable integrated development of infrastructure and more cargo terminals. It also provides for long-term leasing of railway land for cargo-related activities for a period of up to 35 years at the rate of 1.5 percent of the market value of land per annum.

“The existing entities using railway land for cargo terminals will have the option to switch to the new policy regime after a transparent and competitive bidding process. Over 300 PM Gati Shakti cargo terminals would be developed over the next five years and about 1.2 lakh employment would be generated. This will increase the modal share of rail in freight transportation and reduce overall logistics cost in the country,” it said.

It also said the policy also simplifies Railways’ land use and Right of Way (ROW) for integrated development of public service utilities like electricity, gas, water supply, sewage disposal, urban transport, etc by providing railway land at 1.5 percent of the market value of land per annum.

“For Optical Fibre Cables (OFC) and other smaller diameter underground utilities, a one-time fee of Rs 1,000 will be charged for crossing the railway track. The policy provides for use of railway land at a nominal cost for setting up solar plants on railway land. The policy also encourages the development of social infrastructure (such as hospitals through PPP and schools through Kendriya Vidyalaya Sangthan) on railway land at a nominal annual fee of Re 1 per sqm per annum,” it said.