When Japanese prime minister Jonichiro Koizumi visited India last year, he pledged Japanese financial assitance for the dedicated freight corrridor project. The Japanese study will take one and a half year before they decide whether to invest, but the Indian Railways is not waiting for that — such is the level of confidence, reports CNBC-TV18.

The Indian Railways will register a company called Dedicated Freight Corporation with an equity capital of Rs4,000 crore to implement the project, estimated to cost from Rs22,000 to Rs33,000 crore.

In the first phase, the most congested East-West corridors, that is Ludhiana-Howrah, Ludhiana-Mumbai lines will be connected, over five years. Later, the other main metros will be connected. The entire exercise will bring down the unit cost of transport by carrying larger volumes at faster speeds.

The variable cost of moving one tonne of cargo over a kilometre could be cut to a third to 15 paise, with the freight corridor. Container trains could move between Delhi and Mumbai in 18 hours from the 47 hours they currently take. The average speed of passenger trains on the existing routes could also double, from 55 kilometres an hour now.

Indian Railways is approaching the freight corridor project from a position of strength and wants to retain much of the profits. The company implementing the project is departmentally owned. It will own the railroad, charge for access and haulage.

Private companies could be engaged to build the road on deferred payment basis and they will be roped in to operate trains by renting out time on the railroad.