Railway advertising body seeks concessions from govt to bring business back on track

The Federation of Advertising Agents of Indian Railways sought a one-year license fee waiver among a charter of requests made to Railway Minister Piyush Goyal

e4m by exchange4media Staff
Updated: May 11, 2020 1:24 PM
railway minister

In the effort to alleviate the acute business challenges that confront railway advertising concessionaries in the face of suspension of passenger train services and shutdown of railway stations across the country, following the Covid-19 outbreak, the newly constituted Federation of Advertising Agents of Indian Railways has approached Railway Minister Piyush Goyal with a charter of requests. 

The Federation, which has as its members India’s top railway advertising concessionaries holding exclusive rights on formats like hoardings, railway station boards, glow-signs, LED screens, video walls, and Railway Display Networks (RDN) across railway zones, has made a representation to the minister, seeking: 

  • Waiver of license fee on all existing contracts for a period one year from the date of enforcement of national lockdown. This period may be considered as the period of recovery for the media operators who have been hit hard by the fallout of the Covid-19 crisis and lockdowns.
  • Reduction of security deposit provided by the concessionaires to an amount equivalent to two months of licensee fees. This would provide the media operators with more working capital hand, considering that they are mostly MSMEs operating with limited cashflow.
  • Reduction in the security deposit to be provisioned in all railway advertising tenders to be floated in the future.
  • Monthly payment of license fee under all existing railway advertising contracts.
  • Cessation of escalation of annual license fee applicable under the existing contacts.
  • Facility for surrender of existing contract(s) and refund of security deposit and unused license fee in the event of a concessionaire being unable to operate the contracted media assets / utilities owing to the negative fallout of the current crisis. 

The Federation has also requested and if required for constituting a Task Force that may look into the representation in a time-bound manner. It was also suggested that the Task Force may have three representatives from the Federation to “review, discuss, study and resolve the appeal”.  

The Federation in its representation has highlighted that the railway media concessionaires have been collectively contributing non-fare revenues of Rs 350 crore to the Railways every year, without the Railways incurring any significant expenditure toward the advertising activity.

 It was also cited that the members of the Federation through their business operations have created direct and indirect employment for over 1 lakh people. 

The Federation of Advertising Agents of Indian Railways has pointed to the sharp dip in advertising business in the wake of contraction of the national GDP, and added that the squeeze of ad dollars will have immediate- to medium-term impacts on railway advertising business. 

The Federation’s plea has been made on the premise that a compassionate and considerate assessment of the current situation of the railway advertising business, backed with adequate waivers and safeguards, will encourage the concessionaires to rebuild the business once normality returns, while ensuring business continuity and passenger services. It would also encourage the concessionaires to stay invested in the rail media assets for the entire duration of the contracts that are in force.

 Importantly, support from the Railways to the media operators at this juncture would also encourage this industry to pro-actively consider future investments in railway media and advertising opportunities when the overall business environment improves.

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