Now, Indian Railways looks at 2 giant PSUs to manage its rolling stock

The latest proposal in the project, which is being seen as a major reform in the rail sector, will soon come up for inter-ministerial consultation.

Altering its original plan to set up a mega rolling stock company to include all factories under it, the Railways plans to form two new Central Public Sector Undertakings as holding companies to control coach and engine production.

The latest proposal in the project, which is being seen as a major reform in the rail sector, will soon come up for inter-ministerial consultation. It would lead to the setting up of a new Indian Railway Motive Power Company to own and run factories like Chittaranjan Loco Works and Diesel Loco Works, Varanasi, and those in Madhepura and Marhowra in Bihar.

For now, as part of the “100 days” plan approved by the Prime Minister’s Office (PMO), the Rail ministry is gearing up to form the Indian Railway Rolling Stock Company (IRRC) to own and operate the coach-making plants — Modern Coach Factory, Rae Bareli, to begin with — and the wheel factories.

Sources said top brass of the ministry felt that by making two companies, one dealing in coaches, which is controlled largely by the Mechanical department, and another in engines, which comes under the Electrical department, the project can be insulated from departmental rivalries.

However, some officials feel that forming a single holding company dealing in all rolling stock, like China, would serve as a more effective antidote to “departmentalism”.

Officials said the private consultancy firm studying the feasibility of the project had advised the setting up of two entities. Even when divided into two, the entities in terms of size and scale will be among the biggest in the world.
A Cabinet note is to be prepared to begin the process to form IRRC and incorporate MCF Raebareli with an authorised paid-up capital of around Rs 1,700 crore. Subsequently, other large units, like RCF, Kapurthala and ICF, Chennai, and the wheel plants will be included.

For the first five years the IRRC, a Schedule A central PSU owned fully by the government, will have its top brass, such as CEO and MD, appointed through the Rail ministry. After that, the selection process will be opened to the market and anchored by the Public Enterprises Selection Board (PESB), sources said.

Officials said the benefit of a corporatised entity will be that India can catch up with the rest of the world in terms of modern technological advances in making railway rolling stock.

It can operate with a profit motive and join the global race of supplying to other countries. “The chief of a Schedule A PSU can, for instance, can approve new technology infusion in projects even as large as Rs 5,000 crore,” said an official.

Incidentally, it took over two decades for India to process the tender for bringing in the technology and manufacturing the German-design Linke Hofmann Busch (LHB) coaches in the early 2000s.

While India’s rolling stock industry missed the technology bus in the late 80s and the 90s, setting itself back by at least a decade, there will be less chance of such a repeat with professional corporate entities steering this area of industrial production and opening up the sector, officials said.

The project has met with resistance from the powerful railway unions which have alleged that this is a first step towards privatising precious assets of the government — a claim the ministry has denied.

Source :- Indian Express