Manu Srivastava, Managing Partner, HLS Global in India,
Indian Railways Practice
After decades of negative headlines, Indian Railways (IR) are enjoying some positive news. Rail companies from foreign countries are keen to invest in IR projects and see opportunities in the sector for the next 10-20 years. India is poised to be one of the largest markets for companies operating in the railway industry.
A number of government initiatives have come together to heighten the importance of IR industry as a whole and IR components sector in particular. These initiatives present new business opportunities for foreign and domestic manufacturers of rail components. In brief, the scenario can be described as follows:
Objectives of IR – Increasing its revenue by investing in:
(i) Dedicated Freight Corridors that can increase the freight traffic, and
(ii) High-Speed Trains which could help improve passenger revenue.
Demand has led to new investment: In recent years, big project announcements by IR have created significant demand and investment in the sector. The future roadmap of IR and some of the focussed areas are as below:
- Dedicated Freight Corridors
- Dedicated High-Speed Corridors
- 100% railway electrification to be completed by 2022
- Increasing the maximum speed limit of tracks to 160 km/hr
- Delhi-Howrah and Delhi-Mumbai section. Work to start by December 2019.
- Approvals for other sections of golden quadrilateral and diagonals by December 2019 and works to start by March 2020.
- Increasing train speed on the existing Indian rail network up to 160 km/hr to 200 km/hr
- Station Redevelopment
- IRSDC and zonal railways to start redevelopment work in 100 stations by December 2019.
- Redevelopment with world-class passenger amenities – waiting halls, ticketing, toilets, escalators/lifts, LED lights, etc
- Commercial utilization of railway land by separate process
- The master plan for doubling/tripling/quadrupling of railway lines
- Increasing production of rolling stock
- Finalizing production plan of the next 10 years by July 2019
- Manufacturing of LHB coaches & EMUs/MEMUs
- The gradual replacement of ICF rakes by LHB rakes/EMUs/MEMUs
- Vande Bharat train sets – 100 train sets by December 2020
iii. Faster rakes with vista dome coaches for scenic/narrow gauge routes
- Addition of 200 AC rakes in Mumbai Suburban
- Conversion of diesel locos to electric locos –
- 108 in 2019-20
- All by 2024
- Introducing push-pull operations in all premium trains
- Solar Power Generation
- To lease lands on either side of tracks to companies for solar power generation.
- 1000 MW solar power plant
- Increasing the speed of empty wagons to run at 100 Kmph and loaded trains to run at 60 kmph for improving turnaround time
- Head on Generation (HOG) to replace End on Generation (EOG) in all premium trains to reduce diesel consumption, pollution and noise
- Safety & Security
- Advanced Signalling
- TCAS to be upgraded to make its features equivalent to other advanced systems.
- Completion of pilot projects of advanced signaling in 4 segments 2020
iii. Installation of advanced signaling on the whole network by 2024
- Approval of the cabinet for 10 MHz spectrum
- Crew voice and video recording systems (Black box for the trains) in 500 locos by March 2020 and in all locos in 3 years.
- CCTV in all coaches and an on all stations
- With a surveillance system
- All 6,124 stations and 7,020 coaches of premium trains & EMUs in Mumbai suburban by 2020
- Removal of level-crossings
- Track modernization/renewal
- Introduction of LHB coaches
- Elimination of all unmanned level crossings by 2024
- Passenger and Freight services
- Punctuality – Target 100% with accurate reporting
- Introducing new trains with private participation
- Rationalization of timetables to ensure better throughput of passenger trains
- Cleanliness – Stations, trains and along with the tracks
- WiFi on all trains and stations
- POS machines, digital payment facilities for payments (ticketing, catering)
- Eliminate jerks in all LHB rakes
- Rail Display Network
- Timetabled freight trains – especially for perishable commodities
- Real-Time Information System (RTIS) to be implemented 100% on all locomotives
- Increasing the speed of freight trains
Demand-Supply mismatch: The above-focussed areas create opportunities for railway component manufacturers from India and abroad. Additionally, a recent analysis by HLS Global in India found that supply bottlenecks exist for about 240 railway components and only a handful of suppliers exist for many key components. Hence, there is no competition and accordingly, the price would not be a matter of concern for potential suppliers. In many cases, the demand clearly outstrips the supply. Therefore, there is an immediate and very strong potential business opportunity available in certain specific areas in the railway component sector.
Ease of procurement rules and regulations: Decades of limited information about business opportunities in Indian railways component manufacturing had created significant gaps in both the capability and capacity of the domestic rail supply chain. Also, a general lack of awareness by foreign railway suppliers about procurement opportunities with IR prompted them to operate on limited information and discouraged them to do business with IR.
Working and coordinating with IR has become relatively easier over the past few years. There has been a visible improvement in terms of transparency in the working of IR. Communication between IR authorities and railway suppliers has increased manifold. A more flexible and open-minded approach has been followed by IR in adopting the international best practices and technologies for the modernization of IR.
The procurement rules have been simplified and relaxed during the stage of selection of potential railway suppliers by Research Design & Standard Organisation (RDSO – a research arm and supplier selection body of IR). A similar approach has been noticed with the procurement team at Zonal Railways, Production Units, and Railway Board too. The suppliers are being approved within the time-bound manner which greatly encourage railway components’ manufacturers to focus on the sales process and get visibility of potential revenue accrual from IR.
Critical Success Factors in Doing Business with Indian Railways:
- Understanding specific requirements of Indian Railways
- Practical experience in the supplier selection process of Indian Railways
- Thorough execution
HLS Global is a Japanese business consulting firm and focussed on India market entry services. Amongst other industries & sectors in India, HLS Global in India helps railway companies to establish in India and sell their products & services to Indian Railways.
For any query, please email: Manu@HLS-Global.in / Meghna@HLS-Global.in / JapanDesk@HLS-Global.in