Indian Railways has substantially stepped up capital expenditure notes FICCI
Capital Market , Jan 15, 2020
FICCI Capital Goods Committee released a report on ‘Opportunities for Capital Goods Industry with Indian Railways and Metros’ highlighting various opportunities for capital goods sector under ambitious construction projects such as high-speed rail and dedicated freight corridors. These provide new business opportunities for Indian industry. The report identifies specific opportunities for industry across various areas such as rolling-stock manufacturing, sub-assembly or component manufacturing, machinery and tool manufacturing, and project execution.
FICCI report highlights that Indian Railways has substantially stepped up capital expenditure from historical levels of Rs 40,000-50,000 crore per annum. Railways’ capital expenditure for 2019-20 was Rs. 1.3 lakh crore, while budget for 2019-20 stands at Rs 1.59 lakh crore, as it undertakes high priority initiatives such as electrification, rolling-stock upgrade and track expansion. Also, metro projects in multiple cities are in various stages of execution.
FICCI report captures ‘Voice of Industry’ through inputs from industry players associated with Railways and Metro corporations. Industry players expressed great enthusiasm to pursue opportunities with Railways and Metros with many targeting more than doubling of business over the next 5 years. The industry players also appreciated the transparency in bidding and tendering processes while voicing the pain points they face vis-ŕ-vis procurement policy and processes.
FICCI report highlights many recommendations for policymakers to further facilitate industry participation in these opportunities. The recommendations include formulation of national railway plan, reforms in procurement policy and processes, strategic initiatives such as phased manufacturing program, expansion of PPP model to newer areas, and closer collaboration with industry for absorption of technology. The report identifies imperatives for industry which include de-risking business from over-reliance on Railways orders, forge partnerships with global technology players, promote self-certification, and ramping up of manufacturing and project execution capabilities.