Rail to India
(Last updated: 18 July 2013)
Trends and opportunities
The market
The Indian Railways (IR), a state enterprise operated by the Ministry of Railways and is the fourth largest rail network in the world. The Railway Board, under the Ministry of Railways, is the decision making body for all rail projects, governing 17 zones across India, as well as a number of subsidiaries.
In recent years Indian Railways has launched various schemes to attract private investment and participation, such as:
- special freight train operator scheme
- automobile freight train operator scheme
- wagon investment scheme
Major projects include:
- development and modernisation of stations
- dedicated freight corridors
- development of metro rail in Delhi, Mumbai, Bangalore, Hyderabad, Jaipur and Kolkata
- manufacture of rolling stock
Significant funds have been allocated by the government in the 2013-14 budget for railway projects targeting 500km of new railway lines, 750km doubling of tracks and 450km of gauge conversion. The railways have been facing project delays due to financial constraints, land acquisition, environmental approvals and a shortage of technical skills.
The Dedicated Freight Corridor (DFC) is the one the biggest projects to be undertaken by Indian Railways. It is funded by two multilateral agencies, the World Bank and Japan International Cooperation Agency (JICA), which offers a greater certainty of payments. Indian companies in the rail sector are aware of Australian expertise in freight and heavy haul management and are keen to access Australian capability.
Rapid Transit projects in India are based around metro, monorail and light rail systems. The first rapid transit system in India was the Kolkata Metro, which commenced operation in 1984. The Delhi Metro was India's first modern metro, commencing operation in 2002. Rapid Metro Rail Gurgaon commenced operation in April 2013 is India's first privately owned and operated metro.
The Government of India as part of its urban transport policy will support metro networks across cities that have a population of two million and above. Metro rail has become one of the defining features in urban planning of Indian cities. As per the 12th Five year plan (2012-2017) of the Planning Commission, The Government of India has estimated the investment required for metro projects to be around US$27 billion. Major metro projects are under construction in Hyderabad, Jaipur, Bangalore,Ahmedabad and Kochi. Projects in tier 2 cities like Chandigarh, Pune and Indore are at the planning stage.
The Mumbai Monorail will be the first monorail in India, with the first phase operational by December 2013. The Kerala Monorail project is the second major monorail project launched in the country. Other monorail projects are being developed in Delhi and Bengaluru.
Opportunities
The key drivers for growth in India for Australian companies in the rail sector are network expansion, capacity expansion for passenger and freight, modernisation, and training and skills development to support the new expansion of the railways.
Opportunities exist for Australian exporters in:
- Niche areas where Australian expertise is highly regarded like heavy haul, rail safety, training and signalling
- Consultancy and project management services for the civil and systems related contracts
- Power supply, signalling and communication, automatic train control systems, track laying, and fare collection systems
- Supply of safety equipment and services
- Supply of energy efficiency products and technologies, and cleantech related consultancy services
- Rolling stock engineering expertise and components to the OEMs
- Delivery of onshore and offshore training programs in area of heavy haul operations, maintenance and adoption of new systems eg. freight scheduling
- Collaborative research in signalling, safety, freight movement, wayside track monitoring systems, etc.
Competitive environment
International companies from the United States, Canada, Europe and China are actively involved in rail sector projects in India. International OEM’s like Bombardier, Mitsubishi, Hyundai-Rotem, Hitachi, Alstom and Siemens have relationships with Indian Railways through direct supply and joint venture partnerships. Alstom has affiliations with Indian public sector undertakings like Bharat Heavy Electricals Limited (BHEL) and Bharat Earth Movers Limited (BEML) for manufacturing locomotives and high speed transport projects. Bombardier Transportation is a major supplier of metro coaches for the Delhi Metro Project.
Other international companies involved in rail sector projects in India include Atkins Global, STS Rail, Interfleet Technology, AHL-TECH, SGS India, Parsons Brinckerhoff India Pvt Ltd and Faively Rail Technologies India Ltd.
Tariffs, regulations and customs
The current legal framework under the Railways Act 1989 allows private railway systems in all forms. However, the government policy articulated under the Industrial Policy Resolution of 1991, reserves railway transportation for the public sector. This means that railway operation can only be handled by the public sector, while all other activities such as design, construction, financing, and maintenance can be undertaken through private participation.
The Railway Board was constituted under the Railway Board Act, 1905 and it is also a railway regulator. The tariff policy for Railways is fixed by the Railway Board.
At present, the Indian Railways is managed through 17 Railway Administrations which are legal entities. In addition there are six ports and other railway entities. These railway systems are members of the Indian Railway Conference Association, a body which deals with issues of inter railway movement of wagons and locomotives such as levy of hire charges for use of rolling stock belonging to other railways.
Marketing your products and services
Market Entry
- Participation in Tenders – most rail projects are tendered by the relevant project authority and Australian companies can participate in these tenders. These tenders are publicly released on the websites of the project authorities. Austrade India has prepared a procurement guide for Indian Railways, DFC project and Metro Projects which can be shared on request.
- Some Australian companies have executed pilot projects to demonstrate technology across verticals such as energy efficiency, fire safety and rail safety. This has led to adoption of the technology and follow on contracts.
- Sub-contracting opportunities are available with foreign, Indian private and Government owned companies. Austrade can assist to identify and introduce Australian companies to these groups.
- Having an Indian partner either as an agent, distributor, manufacturing partner or associate assists with profiling of company with the concerned authorities ahead of any tender, achieving cost competitiveness and meeting localisation requirements. Austrade has an extensive network of offices in India and can facilitate partner identification and selection.
- Visiting the market regularly to meet with Indian companies and key decision makers, attending and participating in targeted events are good opportunities to understand the Indian market, increase your company profile and build relationships.
- Companies seeking to enter the market need to be willing to take a long term view of the market as decisions, especially in Indian Railways projects can take a long time. Due to autonomous nature of DFC and metro project authorities, decision making is less bureaucratic. Companies need to be prepared to move quickly as once decisions to proceed are taken as time frames for responding are usually tight.
Trade events
Rail sector related events in India:
10th International Heavy Haul Conference, 4-6 February 2013, New Delhi
Rail.Asia 2013, 22-23 February 2013, New Delhi
10th International Rail Equipment Exhibition, 3-5 October 2013, New Delhi
Exhibition on Railway Equipment, Technology and Services, 10-11 April 2014, New Delhi
Intermodal India, 20-22 November 2013, Mumbai
Major international rail events that feature participation from the Indian rail industry are listed on the Rail Serve website.
Links and industry contacts
Indian Railway Board - www.indianrailways.gov.in/railwayboard
Dedicated Freight Corridor Corporation of India Limited (DFCCIL) - http://dfccil.org
Delhi Metro Rail Corporation - www.delhimetrorail.com
IRCON International Ltd - www.ircon.org
Mumbai Railway Vikas Corporation (MRVC) - www.mrvc.indianrailways.gov.in
RITES (Government Enterprise - consultancy organisation) - http://new.rites.com
Rail Vikas Nigam Limited (RVNL) - www.rvnl.org
Research Designs & Standards Organisation (RDSO) - www.rdso.indianrailways.gov.in
Railway Staff College, Vadodara - www.rscbrc.indianrailways.gov.in
Indian Railway Institute of Transportation Management, Lucknow - www.iritm.indianrailways.gov.in
Indian Railway Catering & Tourism Corporation Ltd - www.irctc.co.in
Indian Railway Finance Corporation Ltd (IRFC) - http://irfc.nic.in
Railtel Corporation of India Limited (Rail Tel) - www.railtelindia.com
Konkan Railway Corporation Limited (KRCL) - www.konkanrailway.com
Bharat Wagon and Engineering Co Ltd (BWEL) - http://bharatwagon.bih.nic.in
Centre for Railway Information Systems (CRIS) - http://cris.org.in/CRIS
Container Corporation of India Limited (CONCOR) - www.concorindia.com
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.