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The Competition Commission of India (CCI) has turned down the plea of container train operator Arshiya Rail to grant an interim stay on the Railway Ministry's order to increase haulage charges.
This was confirmed to Business Line by multiple sources in the know.
Since December 1, the Railway Ministry has increased haulage charges by 50-200 per cent for certain commodities in domestic segment.
Container train operators (CTO) have to pay haulage charges to the Indian Railways for using its facilities such as track, locomotive and signalling systems.
For CTOs, the haulage charges account for nearly 60-70 per cent of the operating cost.
The Railway Ministry's move has hit the domestic business of CTOs.
Following the Ministry move, Arshiya Rail had approached the CCI with a complaint against the Railway Ministry. Another player Kribhco has also moved the CCI on the same issue.
Arshiya Rail had also subsequently approached the CCI for an interim stay of the order till the CCI takes a final decision.
This plea for an interim stay of the Railway Ministry order has been declined by the CCI, said sources in the know.
A final decision of the CCI on the complaint is awaited.
IMPACT OF INTERIM RELIEF PLEA
If this interim relief of the CCI had come through, the domestic train operations business would have become more profitable for companies including Arshiya Rail, Container Corporation of India (Concor), and Kribhco.
There are 15 CTOs in the country including ETA Freightstar, B2B Logistics, Gateway Distriparks, amongst others. The extent to which this decision hits each player varies widely.
MINISTRY DECISION
The Railway Ministry, in September 2010, proposed to raise haulage charges by 170-200 per cent for movement of heavy commodities — cement, stone other than marble, iron and steel, alloys and metals, and petroleum products.
While the increase was initially proposed for both domestic and export-import traffic, the Ministry later exempted export-import cargo and domestic movement of ceramic tiles and white cement from the hike.
The Ministry's move was perceived by the operators to be ‘anti competitive' as it discouraged domestic movement of heavy commodities.
The level of traffic moved by container operators pales in comparison with the Indian Railways, which itself transports commodities such as cement, iron and steel, metals and petroleum products in bulk.
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