The biggest news related to Indian Railways in the latest Budget was the announcement of 400 new-generation Vande Bharat trains to be built in three years. The common reaction in the Railways and industrial circles was that the government had overreached. This was because not even one train was made after the success of the first two in 2018-19, and the financial performance of the Railways is so poor that such a massive investment in passenger trains, which are largely losing propositions, seemed bizarre.
The massive jump in investments in railway projects reflects the government’s resolve to invest in key sectors of the economy and the lack of commensurate increase in revenue was not a hinderance as long as the investments serve the economy well in the long term.
It is clear that the government is betting strongly on Vande Bharat trains. While 104 rakes would be manufactured mainly at the Integral Coach factory (ICF) and its other factories, there is speculation that the 400 trains announced were in addition to them, to be manufactured by rolling stock majors of the world and their associates in India. These associates are in the private sector, barring BEML, which is on the block for disinvestment.
Industry watchers remained sceptical in the backdrop of the government not following up on its recent radical projects like operation of private trains and corporatisation of the Railways’ production units (PUs) into a corporation called Indian Railways Rolling Stock Company.
Earlier too, efforts by the Railways to engage major rolling stock manufacturers through a tender for modern train sets or setting up a train manufacturing unit under PPP at Kancharapara had ended with a whimper.
Big move
In quick succession of the Budget announcements this year, came the news of tendering for a massive 90,000 freight wagons at a cost of ₹30,000 crore, which the Railways has navigated quickly and smoothly, with ordering well on its way. This was followed by the notice to manufacture 1,200 locomotives at its Dahod factory in PPP mode.
It has become increasingly clear that the government means business and it would next pursue its vision to order 400 trains from the private sector at a cost of ₹52,000 crore, thereby indicating a gradual shift in manufacturing of rolling stock to the private sector and downsizing its PUs.
It was argued earlier in these columns that the government would move cautiously ahead with this strategy without declaring its intention explicitly, given the sentiments and politics involved in depriving a thriving, albeit not very efficient, government sector.
The Railways has floated a large tender of around ₹26,000 crore for the procurement of 200 upgraded equivalents of Vande Bharat trains to be built by a contractor in ICF and at Latur, a factory set up recently by the government. It may look like a half-measure but it would help upgrade the Vande Bharat trains to truly world-class levelsl.
Close on the heels of this tender, it is expected that bids would be called for another lot of 200 aluminium Vande Bharat trains; aluminium trains are lighter, aesthetically-superior and more energy-efficient. It would be better if the project envisages that these be built in private factories in India.
That would signal a determined move to leverage the non-Railway manufacturing capacities in the country, what with four such factories in place and at least two under construction. It is expected that these trains should be designed to be good for 160-200 km/h speed range and, therefore, be future-ready for the tracks being upgraded on select routes.
It is not good that train building for Railways on one side and Metros/RRTs on the other are exclusive domains. The Railways’ initiatives would pave the way for exploiting possible synergies among all the factories.
Unlike its previous botched efforts, if the Railways successfully moves to get modern trains manufactured through private builders, it would be nothing short of a watershed. Why? Because the Railways’ PUs have functioned for long on assured orders, with no competition to contend with. They do have core competence but it has not been exploited, depending as they are exclusively on orders handed out by the Railway Board as part of their Annual Production Programme.
A judicious mix of government and private play for manufacture of trains is necessary. Exciting times seem to be on the horizon for passengers.
The writer, a Retd. General Manager, Indian Railways, is an independent rail consultant