Rail versus roads: Rebalancing India’s freight mix

For decades, India’s freight landscape has been led by roads, with rail playing a secondary role. And even today, that has not changed much. Nearly 70 per cent of India’s freight moves by road while rail handles only about 25 per cent.¹ This highlights economic inefficiencies. For instance, rail transport costs roughly INR1.9 per tonne-km while road costs can go up to INR3.78 per tonne-km, which is nearly double.²

So, why does the more expensive option still dominate?

Part of the answer lies in flexibility and reach. Roads offer door-to-door connectivity, faster turnaround times for shorter distances and fewer operational constraints. But now, things are starting to shift. Indian Railways is now moving record volumes. For instance, over 1,670 million tonnes of freight was moved in FY26, a record growth.³ At the same time, dedicated freight corridors are improving speed and reliability. Multimodal logistics is also gaining traction – Indian Railways has approved 306 Gati Shakti Multi‑Modal Cargo Terminals (GCTs) with a combined capacity of 192 million tonnes per annum, of which 118 are already operational.⁴

This momentum is not just policy‑led but capital‑backed too. Over INR8,600 crore of private investment has already flowed into these cargo terminals, supported by incentives such as cost exemptions, rebates and shared asset maintenance.⁵ Freight revenues from GCTs have grown nearly fourfold to INR12,608 crore between FY23 and FY25 – clear evidence that scale is building.⁶ Digitally, platforms like the Unified Logistics Interface Platform – now connecting 44 systems across 11 ministries – are improving real‑time visibility and coordination across transport modes, indicating transformation through technology.⁷

So, the opportunity to rebalance freight modal share in India is real. Now, how can we capitalise on this?

Make rail more accessible

First and last-mile connectivity is still where road wins. Bridging this gap will be critical
Build true multimodal integration

Seamless movement between rail, road, ports and warehouses will drive adoption
Make rail a predictable, business friendly option

Cost advantage won’t alone drive adoption. Consistency in transit times, better services and simpler processes will make rail a more viable choice for businesses

Rebalancing the modal mix will be critical to make India’s supply chains more efficient and competitive.

^[1] Road to rail: Unlocking India’s freight potential, World Bank, 19 November 2025, accessed on 24 April 2026

^[2] India’s logistics cost is 7.97 per cent of GDP, concludes NCAER in first comprehensive study, ET Infra, 23 September 2025, accessed on 24 April 2026

^[3] Record 1,670 million tonnes cargo transported in 2025-26: Railway Ministry, ET Government, 1 April 2026, accessed on 24 April 2026

^[4] Gati Shakti Multi-Modal Cargo Terminals (GCTs): Driving India’s logistics transformation, PIB, 13 January 2026, accessed on 24 April 2026

^[5] Gati Shakti Multi-Modal Cargo Terminals (GCTs): Driving India’s logistics transformation, PIB, 13 January 2026, accessed on 24 April 2026

^[6] Gati Shakti Multi-Modal Cargo Terminals (GCTs): Driving India’s logistics transformation, PIB, 13 January 2026, accessed on 24 April 2026

^[7] ULIP surpasses 100 crore API transactions: Enabling seamless, smart and sustainable logistics, PIB, 19 March 2025, accessed on 24 April 2026