June 17, 2024
Locomotive Leasing

Revolutionizing Indian Railways The Rise of Locomotive Leasing and Its Implications for the Future

Secondly, aged locomotive fleet size is also increasing. Around 40% of the total locomotive fleet is more than 25 years old and requires replacement. Leasing newer locomotives temporarily helps reduce operational issues with old locomotives. It provides flexibility to phase out old locomotives in a planned manner.

Thirdly, demand patterns keep changing with expansion of network and introduction of new trains. Leasing locomotives on rental basis allows Indian Railways to hire locomotives as per changing demand without large capital investment. Locomotives can be leased for peak seasons, new routes or during maintenance of existing fleet.

Emergence of locomotive leasing companies

Taking advantage of Indian Railways need, several locomotive leasing companies have emerged in recent years. Major locomotive lessors include Spanish company CAF India, Swiss company ABB, GE from USA and Vossloh Locomotives from Germany.

These companies lease locomotives like diesel, electric and high horse power locomotives to Indian Railways. Leasing period ranges from 3-10 years with rental agreed upfront. Lessors take care of maintenance during leasing period as well.

Currently, around 1200 leased locomotives are operational with Indian Railways. CAF India has emerged as a leading lessor with 470 WDG4 and WDG4G diesel locomotives under lease. Additionally, Indian Railways has leased 100 electric locomotives from ABB.

Legal and regulatory framework

To facilitate locomotive leasing, Ministry of Railways has notified necessary legal framework and policies.
Locomotive Leasing Policy of 2012 laid down guidelines for leasing of locomotives. It stated leasing as complementary to Indian Railways owned fleet.

Key highlights of the policy included – Leasing period from 3 to 15 years, payment of fixed rentals in Indian Rupees, maintenance responsibility of lessor during lease etc.

Additionally, necessary amendments were also carried out in the Railway Act 1989 to legalize leasing of rolling stock. With a conducive regulatory system in place, locomotive leasing has picked up rapidly in last few years.

Locomotive classes under lease
While diesel locomotives form bulk of leased fleet, electric and specialized locomotives are also being leased now.

Diesel locomotives

Diesel Locomotive Leasing of various horse power ranging from 2600HP to 6000 HP WDG3A, WDG4, WDG4G classes are commonly leased. These are utilized for freight as well as some passenger operations. Over 1500 diesel locomotives are currently under lease.

Electric locomotives
With electrification of routes expanding, electric locomotives leasing has also witnessed growth. Around 150 locomotives of WAP7, WAG9 classes with 9000-10000 HP are currently under lease from foreign lessors like ABB Switzerland.

Specialized locomotives

Indian Railways has also leased specialized locomotives like BG BCM locomotives for hauling coal, DEMU passenger locomotives from CAF India for route trials etc.

Way forward for locomotive leasing

With Indian Railways residual fleet replacement target of 6000 locomotives, locomotive leasing is expected to grow further in coming years. Following are the expected future trends –

– Leasing of higher horse power 12000-16000 HP locomotives for heavy haul operations.

– Introduction of hydrostatic diesel locomotives and battery electric locomotives on lease basis for improved fuel efficiency.

– Leasing based on traffic requirement rather than outright purchase will be new approach.

– Public private partnership (PPP) model for leasing involving Indian leasing companies is likely.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it