In an unexpected move, the Indian Railways cancelled its Rs 30,000 crore contract for the manufacture and maintenance of 100 aluminium-bodied Vande Bharat trains over a pricing dispute on Tuesday, 13th August. Alstom, the French rolling stock company, had won the tender in June 2023.
The same was confirmed by Olivier Loison, Managing Director, Alstom India, in an exclusive conversation with Money Control. “Indian Railways has canceled the tender. However, with our strong local knowledge and investments in industrial and human capital over the years, we are well-positioned and committed to supporting the realisation of this vision [of the railways] in the future, should the opportunity arise,” Loison said.
According to railway officials, the tender committee found the French multinational company’s (MNC) delivering price of Rs 150.9 crore per train set to be excessive and recommended that it be limited to Rs 140 crore.
However, Alstom India intended to close the transaction for approximately Rs 145 crore per train set. The French company was the lowest bidder in the Rs 30,000 crore deal, which was opened on May 30th, 2023. As per the official documents, the firm offered Rs 150.9 crore per train set and planned to produce all 100 Vande Bharat rakes.
Aluminum-bodied train sets were chosen because they are lower in weight and more energy efficient than standard stainless steel. The Indian Railways intends to launch the first sleeper form of Vande Bharat trains in the first quarter of 2025. So far, contracts have been awarded to produce 102 chair cars and 200 sleeper Vande Bharat train sets, respectively.
The Indian Railways is eager to deploy these modern trains to improve the speed, efficiency, and comfort of its services. “The cancellation of the contract helps Indian Railways to buy more time to get the best possible price. The bidders, too, will be better prepared to set up adequate manufacturing facilities,” an official from Alstom stated.
Henri Poupart-Lafarge, Alstom’s CEO, stated in July 2023 that the business would employ new aluminum technology for the project. Poupart-Lafarge stated in a July 2018 interview with CNBC TV-18 that the company had quoted a good price for the project.
However, as per a rail official quoted by Money Control, the contract to produce 200 Vande Bharat sleeper train sets made entirely of stainless steel was previously awarded at Rs 120 crore for each rake.
Notably, for this particular deal, Alstom India and a consortium of Swiss company Stadler Rail and Hyderabad-based Medha Servo Drives were the only bidders. While Alstom bid Rs 150.9 crore for one aluminum-bodied Vande Bharat with a sleeper facility and was the lowest bidder, Medha bid Rs 169 crore and lost to the first.
To be qualified for the offer, businesses needed to have a research and development (R&D) facility capable of producing a prototype and assembling at least five train sets each year. The deal called for the delivery of 100 train sets within seven years, with the winning bidder receiving Rs 13,000 crore upon installation and an extra Rs 17,000 crore for maintenance over 35 years.
Trains were to be produced at the Railways factory in Sonepat, Haryana. Indian Railways had anticipated more participation, with businesses such as Siemens, Transmashholding, and Rail Vikas Nigam Ltd originally set to bid. However, these companies did not match the technical standards, leaving just a handful of bidders to bid for the project.
In April this year, Prime Minister Narendra Modi promised that his government would expand Vande Bharat trains to every corner of the country and charted out the government’s plan to expand bullet train services, adding that three new trains will run in north, east, and south India. However, with the cancellation of the contract, the Rail Department will have to again issue bids and rethink its conditions to attract more bidders.
