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:
iii. Faster rakes with vista dome coaches for scenic/narrow gauge routes
iii. Installation of advanced signaling on the whole network by 2024
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:
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
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