Ad to Riches on the Railway Track

The Railways has a potential to earn Rs 10,000 crore a year just by selling advertising space in coaches, wagons and stations.

Published: 26th July 2015 08:06 AM  |   Last Updated: 26th July 2015 08:30 AM   |  A+A-


NEW DELHI:Train journeys are going to be filled with pleasant surprises. As part of the Indian Railways’ new promotional policy, passengers will be offered free goodies and discount vouchers during their journey. And no, the cash-strapped Railways won’t have to pay the bill for the freebies; in fact, it will help them earn a revenue of several crores of rupees without spending a paisa.

Railways Minister Suresh Prabhu, a chartered accountant, hit upon the idea to help the country’s largest public transporter improve its fiscal health while improving the traveller’s train experience. Passengers travelling by Kalka Shatabdi and New Delhi-Amritsar Shatabdi under the Northern Railway division have been the luckiest as products like Sensodyne toothpaste and Titan discount vouchers are being given to them for the last one month. 

“I loved it. This approach from advertisers is new and interesting. The size of products may not be big, but it was a pleasant surprise gift,” says Amarjeet Singh, who was traveling from Amritsar to Delhi on the Shatabdi this week.

The move   comes after a study by RITES, a Mini Ratna Central Public Service Enterprise under the Ministry of Railways, found that the Railways has a potential to earn Rs 10,000 crore a year just by selling advertising space in coaches, wagons and stations. The outreach of such a campaign is huge as the Railways operates 13,000 trains on 63,000 km of track every day, ferrying 23 million passengers, equivalent to the population of Australia. 

This is how it works. The catering licensees of around 8,000 premium trains like Rajdhani, Shatabdi, Duronto, mail and express trains have been authorised for advertising rights and promotional advertising campaigns in their contracts. The Railways has streamlined the system and the license fee charged per year includes revenue for such rights. The licensee has to pay a fee every year while the catering contract is for five years. 

As per the new standard bid document, caterers are expected to pay the Railways a fixed amount per year per train at the time of bidding for licensing under promotional advertising campaigns. The amount varies from train to train ranging from Rs 4 lakh to Rs 10 lakh per year per train. So, the Railways’ earnings would be somewhere between Rs 400 crore to Rs 800 crore annually.

“Licensees may be permitted to undertake promotional advertising campaigns for the benefit of travelling passengers subject to authorisation from the Railways before the commencement of each campaign,” said a senior Railways officer.

Caterers can tie up with companies for distributing samples of their products for free to passengers. But the Railways has put a clause that caterers must seek permission about the products to be distributed, and prohibited items like tobacco, cigarettes or alcohol  are not allowed. Also,  no audio, video material, stickers or anything that may damage to the Railways property shall not be permitted.

Advertisers who are always looking for new ways to attract eyeballs are finding trains a good proposition to woo the middle class and upwardly mobile. Firms have found innovative ways to engage passengers like a Test Your Oral Health pamphlet in which travellers are asked three questions on oral hygiene and are asked to rate themselves on a scale of 1 to 5.  The move is a win-win for companies and the Railway. While there is zero cost to the Railways as train attendants distribute products, firms will get a huge audience.

The Indian Railways is banking on extra budgetary support of Rs 8.5 lakh crore during 2015-18 to complete its pending projects. The Life Insurance Corporation of India (LIC) has already pledged Rs 1.5 lakh crore in the next five years to the Railways.


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