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SMEs can play a key role in railway sector manufacturing: EY-FICCI report 

The Economic Times , Aug 28, 2018

The Indian Railways is a behemoth - it carries close to 1.2 billion tonnes of freight per annum and over 23 million passengers in 19,000 trains that run everyday, as per findings in a recent EY-FICCI report on the manufacturing potential in the railways sector.

The report urges the government to play a significant role in increasing India’s share in the global rail market. Says Rajaji Meshram, Partner, Transaction Advisory Services, EY, “While the exports from India related to railway sector is to the tune of US$ 350 million, the exports related to automotive sector is around US$ 17 billion. India, given its large railway manufacturing expertise, needs to get a larger pie in the global rail market.”

The findings also highlight the key role that Indian SMEs can play in railway sector manufacturing. As per broad estimates, over 10,000 SMEs are registered on the Indian railways procurement portal.

The report suggests some key aspects that SMEs need to focus on to upgrade to all the advancements that a modernised railway system can speak of:

SME Readiness: A mix of indigenous innovations and technology transfers will come into play for upgradation of railways technology. If new designs are brought to the fore by railway production units, the real test would be to gauge the readiness of SMEs to supply as per the new specifications. And if it is a new technology via a JV mechanism, indigenous procurement conditions will need to be seen while taking the expertise of the existing vendor base into consideration.

Skilling and technology upgrade of SME: After assessing the existing vendor base, a programme to scale up the SMEs in technology and skilling needs to be in place. Making SMEs aware of the required tool sets, manufacturing methods and processes will be crucial.

Financial assistance to SMEs: Access to financial support for SMEs remains a major hurdle. At present no programme exists that can offer such assistance to the SMEs in the railways sector. This aspect needs to be looked at from a renewed seriousness with newer technologies being introduced in the railways.

The report concludes that India’s SME manufacturing ecosystem will need to eventually match the pace with the Indian railways targeting improved speeds, safer operations and higher payloads in the times to come.

 

 

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