Mamuni Das

New Delhi, Feb. 10 Private firms wanting to enter the rail wagon leasing business could find the going riskier with Indian Railways unwilling to provide any underlying guarantee in case the rail customer using the leased wagon (lessee) defaults in payments.

Moreover, with Railways insisting that the leasing companies should be registered in India, and have five years of experience in asset leasing, industry observers fear that the entry of foreign firms which do not have Indian operations would be barred. “There are very few companies in India with five years experience in asset leasing,” said an industry source.

Railways has also stipulated a Rs 5-crore registration fee (one-time) and Rs 250 crore net worth for the firms. Earlier, Railways had sought higher registration fee (Rs 20-25 crore). It was reduced after stakeholders’ objections.

Several companies including GE, Mitsui, Srei Infrastructure Finance, HSBC Rail, and KfW Bank are eyeing the sector.

Railways is working on a wagon leasing policy to allow players other than IRFC to invest in special kinds of wagons and lease them to those railway customers who have use for such wagons. This policy would allow a leasing firm to procure special wagons and lease them to different companies and all the users can enjoy the incentives extended under the wagon investment scheme.

Railways wants private players to invest in special purpose wagons as general purpose wagons have relatively higher utilisation guarantee. The utilisation of special purpose wagons depends on the whether rail transportation continues to be a preferred mode of transport for those commodities.

For instance, special tank wagons with suction facility for moving cement would have higher demand when cement companies use rail transportation. Cement firms can lower their transportation cost by leasing these wagons and getting freight discounts under the WIS.

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