Indian Railways to monetize land parcels by leasing it to e-commerce firms.

The Indian Railways plan to monetize land plots in smaller cities by leasing them for warehouse setup to e-commerce companies. The Rail Land Development Authority, the statutory authority under the Ministry of Railways, said it was in talks with the largest online store in the country, the Flipkart, and that the interest will soon be shared.

Warehousing can be high in demand, as e-commerce business tends to provide same-day delivery and that can be obtained by having a warehouse everywhere. Although plots of railway land have stronger economic returns in main cities, it can be used for warehousing in Tier 2 cities. We’ve defined land in these towns within ten kilometres of the main railway stations, “Ved Parkash Dudeja, Chairman, RLDA.

Flipkart did not respond to a query via email. Walmart-owned Flipkart owns more than a dozen warehouses across the nation, helping them cut down on delivery time, particularly in big cities. With smaller towns driving a bulk of their sales at considerably higher development levels relative to urban centres, analysts believe that providing warehouses or pick-up points in their area may greatly help to save logistics costs. But it can only work if the e-commerce companies utilize the railway network for distribution.

The land is not a matter for e-commerce players who would rather focus on committed sellers and their facilities instead of investing in creating warehouses themselves. Such land parcels may work for bulk products operators or distributors and not e-commerce players with their own issues,” says Mihir Mehta, founder of VS Omnitrade, a supply chain business and consumer goods aggregator service.

Railways have been seeking for a while now to monetize assets. Also, Knight Frank predicts that the overall retail potential in the newly-developed railway stations would hit USD 1.9 billion by 2030, compared with only USD 100 million in 2019, which credits the rise in policy attention on growing rail infrastructure and modernizing established stations.