Ex-Ante Evaluation (for Japanese ODA Loan)
South Asia Division 1, South Asia Department
Japan International Cooperation Agency
1. Basic Information
Country: India
Project: Dedicated Freight Railroad Construction Project (Phase 2) (III)Loan Agreement: March 31, 2022
2. Background and Necessity of the Project(1)

Current State and Issues in the Development of the Railroad Sector and
the Priority of the Project in India

In India, the amount of freight transport has more than doubled since 2000, while
the transport capacity of freight railroad is approaching its limit. The share of thefreight railroad in overall freight transport has been on the decline. Thus,
developing and reinforcing railroad capable of mass transport in a moreenvironmentally friendly manner than road transport in India is an essential task.
In particular, the amount of freight transport along the Golden Quadrilateralconnecting Deli, which is the capital and one of the largest consumption andproduction centers of India, and Mumbai and Calcutta, which are the east andwest gateways to the Indian subcontinent, as well as Chennai, which is thesoutheast part of India, accounts for about 60% of the overall freight transport inthe country. With expected increases in the transport amounts of containerizedcargoes, agricultural products, and mineral, as well as industrial resources in thefuture, Indian freight railroad needs to increase the power and speed of transport,
as well as reinforce transport capacity in collaboration with other transport modes(by the Indian Ministry for Railways in 2020).
Faced with the above situation, the Indian government called for the necessity ofupgrading and expanding railroad networks, introducing high-speed freight cars,and improving railroad access to ports so that mass transport can be achieved
along trunk line railroads in its three-year action plan (FY2017 to FY2019) and12th five-year plan (FY2012 to FY2016). The Indian government particularly
highlighted the necessity of the early development, upgrade, and expansion ofpassenger and freight transport along the dedicated freight corridors (DFC)
between Deli and Mumbai (west corridor) and between Ludhiana and Calcutta
via Deli (east corridor). The Dedicated Freight Railroad Construction Project(Phase 2) (hereinafter referred to as the “project”) has been promoted based on
the above government policy. In the latest national infrastructure pipeline plan(FY2019 to FY2025), the Indian government also highlights the importance ofeconomic reform through the development of transport infrastructures, including
railroad. Furthermore, the government’s policy speech for the FY2021 budget
touched upon the allocation of an increased budget to the railroad sector by 110%compared to the previous year in order to meet the necessity of further reinforcing
transport capacity and the setting of railroad sector as a prioritized sector
because reducing the cost of transport as the basis of the economic developmentof India is one of the main strategies and DFC development is indispensable.
Thus, the project is suitable for the above development policy of the Indian
government.
Japan’s and JICA’s Cooperation Policy in the Railroad Sector and thePriority of the ProjectIn the country-by-country development cooperation policies for India (March2016), connectivity reinforcement through the development of transport(2)

infrastructures, etc., is one of the priority fields and the promotion of railroad
development is included as one of the measures to reinforce the connectivity
among major industrial cities, economic zones, and regions while keeping in mind
the importance of eliminating bottlenecks in the investment and growth ofinfrastructures. The reinforcement of industrial competitiveness through thedevelopment of urban infrastructures, etc., is another priority field for India andthe measure selected is promoting the transport networks, etc., in major
metropolitan areas for the purpose of alleviating traffic congestion, streamlining
passenger and freight transport, improving urban environments, etc. In addition,in its country-by-country analysis paper for India (March 2018), JICA’s analysis
reveals that India needs assistance in infrastructure development, including trunk
railroads, urban railroads, roads, and ports, to eliminate the bottlenecks in its
economic development. Furthermore, JICA’s analysis identifies the necessity ofpromoting cooperation that helps India to deal with environment and climatechange problems as a measure to assist sustainable and comprehensive nationalgrowth. Thus, the project also corresponds to these policies and analysis results.
The project is also considered to contribute to the following: SDG 8 Promotesustained, inclusive and sustainable economic growth, full and productive
employment and decent work for all; SDG 9 Build resilient infrastructure, promote
inclusive and sustainable industrialization and foster innovation; SDG 11 Make
cities and human settlements inclusive, safe, resilient and sustainable; and SDG
13 Take urgent action to combat climate change and its impacts. Therefore, it ishighly necessary to assist the implementation of the project.
(3)
Other Donors’ Activities
The World Bank (hereinafter referred to as the “WB”) has provided about
US$2,725 million in aid to India for the development of a section of the east DFC
between Ludhiana and Mughalsarai measuring 1,193 km. The AsianDevelopment Bank has promoted the development of energy-efficient transportmodes and provided $500 million and $176 million for the railroad projects ofBengaluru Metro and Jaipur Metro respectively.
3. Project Description(1)

Project Objective

The project allows India to meet the demand of freight transportation, which is
expected to grow at a high rate in the future, and to streamline logistics networks
through the construction of new lines between Dadri and Rewari and between
Baroda and Mumbai in the planned distance between Deli and Mumbai and theintroduction of a fully automatic signal and communication system as well as highoutput and high-speed locomotives, thereby contributing to a wide range of
economic development in India.
(2)
Project Site/Target Area
Uttar Pradesh, Haryana, Gujarat, and Maharashtra States (total population: about
410 million (2011))(3)
Project Components
1) Civil engineering and architectural work: Structure construction works
including roadbed, bridges, freight stations, and junction stations
2) Truck laying work: Rail laying, etc.
3) Electric and mechanical work: Development of overhead lines, substations,etc.
4) Signal and communication work: Development of a signal andcommunication system
5) Railroad vehicle procurement: Electric locomotives (50 units of 6,000horsepower and 150 units of 9,000-horsepower locomotives)
6) Consulting service: Construction supervision, quality and safety control,
assistance in commissioning, review of operation and maintenancemanuals, establishment of operation and maintenance plans, assistancein project implementation (including the implementation of trainingprograms), implementation of environmental control and resident
relocation monitoring plans, social development (publication, residentenlightenment activity, HIV/AIDS prevention activity), etc.

(5)

Estimated Project Cost403,258 million Yen (Japanese ODA loan (for the tranche III): 116,520
million Yen)
Schedule(6)1)

July 2010 to May 2027 (203 months in total)
Project Completion is defined as that all facilities are put in service (in May2025).
Project Implementation Structure
Borrower: President of India

(4)

2)
3)

Guarantor: None
Executing Agency: Dedicated Freight Corridor Corporation of India Ltd.
(hereinafter referred to as the “DFCCIL”) and the Ministry for Railways(only for the procurement of electric locomotives)

4)

Operation and Maintenance Agency: DFCCIL in charge of the operationand maintenance of main lines and train operation management facilities(trucks, and signal and communication system), etc., and Indian Railways,
which is an affiliated company of the Ministry for Railways in charge of theoperation of freight transport, including the maintenance of locomotives(7)
Collaboration and Sharing of Roles with Other Donors
1) Japan’s Activity
The project aims to develop a section of the west DFC between Deli andMumbai, which measures approximately 1,465 km, together with thephase 1 project for the section between Rewari in Haryana State andBaroda in Gujarat State.
In addition, a plan to reinforce the freight railroad project operation andmaintenance system was already established for the Ministry for Railways
and the DFCCIL through the dedicated freight railroad operation and2)(8)

maintenance assistance project implemented in the form of technicalassistance.
Other Donors’ Activity
As described in 2. (3), the WB has assisted in the development of therailroad section between Ludhiana and Mughalsarai, the establishment ofbusiness and marketing plans for the DFCCIL, and the development of apolicy for pricing rail rates, which will be the income source for the DFCCIL.
Environmental and Social Considerations/Cross-Sectoral Issues/GenderCategory1)

Environmental and Social Consideration① Category: A② Reason for Categorization
The project falls under the railroad sector characterized by the likelihoodof having environmental and social impacts as listed in the “JBIC
Guidelines for Confirmation of Environmental and Social Considerations”(established in April, 2002).
③ Environmental Permit
Although the project is not required to perform an environmental impact
assessment (EIA) under domestic laws, an EIA report for the project wascreated and approved in November 2011.
④ Anti-Pollution Measures
Pollution mitigation measures have already been taken during
construction by contractors in the form of dust prevention measures,
appropriate storage of construction materials, use of low noise equipment
and machines, etc., in accordance with the environmental control plan.
Mitigation measures for the noise generated after the project is put inservice have been studied, including the installation of noise-insulating
walls in densely populated areas if necessary. The mitigation measuresconsidered in the detail design have been incorporated in a detailed
environmental control plan and contractors are supposed to implement
the measures in accordance with the plan.
⑤ Natural Environment
Although a part of the relevant railroad section runs beside a nationalpark, the section will be constructed parallel to the existing railroad, so
the project is considered to have very limited impact on the naturalenvironment and to be capable of minimizing its adverse impact.
⑥ Social Environment
The project involves acquiring land of about 2,252 ha and relocating
3,499 households. The DFCCIL has promoted dialogues with respect toland acquisition and relocation of residents, provided compensation at
reacquisition prices, and provided assistance to help residents recover
their livelihood based on the resident relocation plan approved by theMinistry for Railways and the compensation policy established in May
2015 in accordance with the new land acquisition law. The procedure totransfer land ownership from residents to the government on the land
register has been completed, but the actual relocation of residents is stillin progress (2,552 out of 3,499 households in total have already relocatedas of December 2021). According to the DFCCIL, the relocation isexpected to be completed sometime in May 2022.
⑦ Others/Monitoring
In the project, the DFCCIL is supposed to indirectly monitor noise,vibration, soil, air quality, water quality, borrow pits, vegetation, landacquisition, and resident relocation through contractors during
construction, and to directly monitor noise, vibration, soil, and water2)

quality after the project is put in service.
Cross-Sectoral Issues① Climate change: The project promotes the modal shift in freight transport
from roads to railroads, thereby contributing to the reduction ingreenhouse gas (GHG) emissions. The project, including the phase 1
project (with the target section between Dadri and Mumbai), is expected
to produce a climate change mitigation effect (in the form of a GHGemission reduction) equivalent to about 14.6 million tons per year of CO2
from 2022 to 2051.
② Measures against infectious disease such as HIV/AIDS: The project is alarge-scale project where workers are intensively engaged inconstruction activities at sites in countries with a risk of HIV/AIDS
infection and many of the workers are expected to be itinerants who do
not live with their families. Thus, the project is considered to have a highrisk of spreading HIV/AIDS infection. To combat this, the DFCCIL, theexecuting agency, has established safety, health, and environment
manuals, including the prevention of HIV/AIDS infection, and taken
necessary measures according to these manuals. The DFCCIL has also
incorporated provisions requesting contractors to participate in HIV/AIDS
prevention activities in contracts. In addition, as a part of its efforts toprevent the spread of COVID-19 infection, the executing agency has
agreed to implement a list of measures (36 in total) during the formulationand implementation of the project, and clarified the required activities,
such as the development work environments (including preparing
epidemic prevention equipment and promoting the code of conduct),supervision with respect to epidemic prevention, and awareness-raisingcampaigns. The executing agency is supposed to make quarterly reports
with respect to the implementation statuses of the measures so as toensure that the impact of COVID-19 is being carefully watched and theexecuting agency has flexibly and appropriately implement the measuresthroughout the project implementation period.
3)

Gender Category: ■ Gender Informed (Significant) (Gender activity
integrated project)<Details of Activities/Reason for Categorization> The DFCCIL has agreed
to adopt gender equal perspectives, including promoting the employmentof women in construction work and in the DFCCIL, and has been

implementing actual measures accordingly.
(9)
Other Important Issues
The project has been implemented under the soft loan system based on STEP
(Special Terms for Economic Partnership), which allows Japanese technologies
to be utilized in the project components to develop trucks, signal andcommunication system, etc.
4. Targeted Outcomes(1) Quantitative Effects
Outcome (Operation and Effect Indicators)
Indicator

Baseline (2007)

Working ratio (%)
N/A
Railroad car running distance (both ways) (thousand km/day)
Dadri-Rewari
2.9
Baroda-Mumbai
41.4
Number of railroad cars (both ways) (cars/day)
Dadri-Rewari
N/A
Baroda-Mumbai
N/A
Transport amount (million ton kilometers/day)
Dadri-Rewari
4.1
Baroda-Mumbai
54.7
Maximum speed (km/hour)
75
Reduction in transport time (hours)
Dadri-Rewari
N/A
Baroda-Mumbai
N/A
Reduction in greenhouse gas emission
N/A(million tons/year) (Note)(Note) Value including the effect of the phase 1 project(2) Qualitative Effects

Target (2027)[2 years after projectcompletion]
90
15.1
68.5
112.9
167.6
25.2
105.9
100
3.2
10.4
8.1

Sufficient response to the growing demand for freight transport, streamlining oflogistics networks, promotion of a wide range of economic development, etc.
(3) Internal Rate of Return
Based on the following conditions, the economic internal rate of return (EIRR)
and the financial internal rate of return (FIRR) of the entire west DFC project(combination of the project with the phase 1 project) are 19.8% and 4.6%,respectively.
[EIRR]
Cost: Project, and operation and maintenance costs (excluding taxes)
Benefit: Freight transport cost reduction effect on growing demand
Project life: 40 years[FIRR]
Cost: Project, and operation and maintenance costs
Benefit: Freight revenue
Project life: 40 years
5. Preconditions and External Factors(1)(2)

Precondition: None
External Factors: None

6. Lessons Learned from Past Projects
Based on the ex-post evaluation results (in 2008) of the yen loan project “MetroManila Strategic Mass Rail Transit Development (I), (II) and (III)” in the Philippines,etc., it has been pointed out that when a public firm is in charge of theimplementation, operation, and management of a yen loan project, particularattention needs to be given to the financial sustainability of the public firm, andcomprehensive assistance (including improving the financial capability andoperational efficiency) needs to be extended to it. The project supports thecomprehensive reinforcement of the operation and maintenance system,
including the financial strategy to be established by the DFCCIL. In a project thatcomes with yen loan called “Assistance Project for the Operation andMaintenance of Dedicated Freight Railroads,” assistance in reinforcing theoperational and maintenance capability was extended through the establishmentof an operation and maintenance system reinforcement plan by the Ministry ofRailways and the DFCCIL.
7. Evaluation Results
The project is suitable for the development issues in India and the development
policies of the Indian government, as well as the cooperation policies andanalysis results of the Japanese government and JICA. The project also helps

India to cope with the freight transport demand, which is expected to grow at ahigh rate in the future, and to streamline the logistics networks through thefollowing: construction of new dedicated freight railroads between Dadri andRewari as well as between Baroda-Mumbai in Uttar Pradesh, Haryana, Gujarat,and Maharashtra States; and introduction of a fully automatic signal andcommunication system and high-output as well as high-speed locomotives. The
project is also considered to contribute to the following: SDG 8 Promotesustained, inclusive and sustainable economic growth, full and productive
employment and decent work for all; SDG 9 Build resilient infrastructure,promote inclusive and sustainable industrialization and foster innovation; SDG
11 Make cities and human settlements inclusive, safe, resilient and sustainable;
and SDG 13 Take urgent action to combat climate change and its impacts.
Therefore, it is highly necessary to assist the implementation of the project.
8. Plan for Future Evaluation(1) Indicators to be Used
As described in Section 4.
(2) Future Evaluation Schedule
Ex-post evaluation: 2 years after project completion