Trade unions of Integral Coach Factory have questioned a deal by the Railway Board, in which manufacture of 308 electrical multiple units was outsourced to three West Bengal-based firms that lack adequate infrastructure and were allegedly termed as “sick units” by the State government.
Trade unions allege that the contract has been awarded to three companies — Titagarh, Jessop and Co and Besco — firms which don’t have basic infrastructure and will be relying on the technical knowhow of railways.
Interestingly, what is more irksome is that ICF has to provide drawings and designs, which are the intellectual property of ICF, free of cost to these firms, which will then be selling the coaches back to the Railways at a cost of Rs 130 crore higher than it would cost to be produced at ICF.
“This is after free transfer of design and drawings and supply of certain raw materials like steel, wheel sets and electrical equipments to the firms,” the ICF Joint Action Council, consisting of 11 unions, claims.
Convenor of the council S Anandraj said, “The cost incurred to develop the present design and drawings at ICF is approximately Rs 1,500 crore. But it was decided to do the transfer free of cost.”
Anandraj alleged that the actual process of floating the tenders for the contract completely violated norms. As per the deal, Indian Railways also has to bear the higher cost due to the price variation clause (PVC). It is alleged that the three firms stand to benefit if there is price variation on steel, electrical machinery, equipment and batteries.
As per the clause, Railways has to bear the coast escalation during the purchase of steel and electrical machinery, equipment and batteries, and again, has to pay the higher coast on the account of PVC to the companies.
“Rajya Sabha MP T K Rangaraj, who is a member of consultative committee on commerce and industry, urged the CBI to look into the move of the Railway Board and take appropriate action if required,” he said.
He said the ICF Joint Action Council would launch a protest in the second week of June if the contract is not scrapped.