Indian Railways (IR) has awarded a significant contract worth Rs 8.2 billion ($US 98.5 million) to a joint venture between Steel Authority of India (SAIL) and Rail India Technical and Economic Service (RITES) for the supply of 2000 open bogie wagons. This order is part of IR’s broader initiative to modernize its wagon fleet and enhance its freight capabilities.
This latest contract follows the March awards for 12,000 similar wagons to four private-sector manufacturers. The awarded companies include Besco, Hindustan Engineering and Industries (HEI), Jupiter Wagons, and Titagarh Rail Systems. HEI will supply 4500 wagons at a cost of INR 19.2 billion, while Titagarh Rail Systems will provide 4463 wagons for INR 19.1 billion.
The new universal open bogie wagons, designed by Jindal Rail for IR, are expected to be introduced by the end of this year. These wagons are intended for dual-use: transporting raw materials in one direction and returning with crude steel in the other. This design aligns with India’s position as the world’s second-largest producer of crude steel, with a production of 125 million tonnes in 2023-24.
The stagnation of rail’s share in the Indian freight market can be attributed to the failure to renew IR’s wagon fleet, coupled with capacity constraints on the network. Despite this, IR’s freight income has seen improvements in recent years.
The National Rail Plan aims to increase rail’s market share from the current 27% to 45% over the next 20 years. To achieve this, IR has been focusing on growing its freight business by providing customized solutions for e-commerce companies, including the introduction of fast trains dedicated to parcel traffic.
IR currently operates around 318,196 wagons and has been procuring between 1500 and 2000 wagons annually from domestic suppliers. The role of the private sector in this procurement process has grown significantly in recent years. Additionally, spending on fleet renewal has increased, with Rs 410.9 billion allocated for acquiring new rolling stock in 2023-24, out of a total spending budget of Rs 2.5 trillion.
“Rail logistics has been recognized by policymakers as the key to success,” says Mr. Umesh Chowdhary, CEO of Titagarh Rail Systems. “Substantial investments have been made and planned in railway infrastructure, which creates capacity, and consequently in the purchase and operation of rolling stock which uses the capacity created.”
