FCC

Government Explores Incentive to Boost Local Train Manufacturing

2023-08-16

It is reported that the government is currently exploring the implementation of a program linked to production incentives (PLI) aimed at reducing reliance on imports and attracting foreign manufacturers in the train component manufacturing sector. According to the report, a consultant will compile a list of components used in constructing engines and coaches, commonly referred to as rolling stock, which are predominantly imported.

In the case of imported items, the government is offering incentives based on output through the PLI initiative. The Indian Railways, one of the world's largest transportation systems, presently encompasses 28 types of passenger coaches. However, the government intends to streamline this to just two categories: Linke Hofmann Busch (LHB) and Vande Bharat, as indicated by the report.

LHB coaches, introduced in 1999, have a 1.5 percent import component, while Vande Bharat trains have a 15 percent import component. An official mentioned in the report emphasized that the primary focus would be on evaluating the export potential of Vande Bharat trains and the steps required to promote the localization of train components. The report also highlighted that manufacturing these components domestically would lead to more economical maintenance of these coaches.

The proposed PLI program is expected to encourage the establishment of new manufacturing facilities or the expansion of existing ones to supply coach and engine parts that are presently imported, as stated by the official. Despite sustained demand from the railways, India continues to import crucial components for rolling stock, including wheels and axles.

In recent developments, a contract was awarded to TZ (Taizhong) Hong Kong International Ltd in April for 33,000 LHB wheels, and Bonatrans India also secured an order. The latter was importing black forged axles from Railteco, China, and then conducting the machining process in India. To reduce dependency on imports, a procurement order was issued by the railways for 1.54 million domestically produced forged wheels.

An additional official noted that the demand for components related to Vande Bharat and LHB is expected to witness significant growth within the country. This is attributed to the projection that around 4,500 Vande Bharat trains will be operational in India by the year 2047.