Ministry of External Affairs Nod must for Bidders of Railways’ Loco Tender

New Delhi:  The Railways has raised a ‘red’ flag for bidders for its loco tender, valued at about Rs 35,000 crore.

All bidders will have to get a clearance from the Ministry of External Affairs first, Railway Board Chairman Arunendra Kumar told.

This move will impact Chinese bidders, who are keen to break into the Indian railway equipment market, one of the world’s largest.

Security issues continue to dog China’s bid to play a bigger role in India’s infrastructure sector. India has till date not permitted Chinese firms to participate in port development projects, and has also been wary of Chinese telecom equipment suppliers.

Kumar declined to comment on the technical bidding process, which is not yet over. But, he had earlier said that the Ministry had decided not to relax the conditions, as requested by one of the Chinese bidders, CSR.

Moreover, the Railway Ministry is yet to get a Cabinet approval for the financial bid documents for the project.

Indian Railways has turned a battleground for US, European and Chinese locomotive manufacturers, all of whom want a share of the loco market pie.

Two Chinese firms, CSR and CNR, have bid for setting up two locomotive factories – electric and diesel – in India to supply about 1,800 locomotives to the Railways over 11 years. American and European firms have traditionally been key suppliers of high-tech products in locomotives for the Railways.

For the proposed electric locomotive factory to be set up at Madhepura, Bihar, bidders include US firm GE Global, and European firms Bombardier, Siemens and Alstom, apart form CSR and CNR.

Similarly, for the diesel locomotive factory in Marhowra, Bihar, bidders include US firms GE, EMD, apart from CSR and CNR.

Industry experts feel that the Chinese participation in bids will lead to strong pricing pressure.

“There will surely be greater pricing competition if the Chinese firms were to participate. Though the company that wins the project will have to operate in India with Indian workers, the back-office costs of Chinese firms are bound to be lower,” Niraj Kumar, former Railway DG, told.

But, the fate of these two projects, the bidding process for which did not go through in the UPA-I Government regime, remains to be seen, given that they are to be set up in remote locations.

“It is a fact that new projects are sanctioned on verbal orders, even in areas where there is no supporting infrastructure,” said Shubhranshu, General Secretary, Federation of Railway Officers (FROA).