Saturday, June 25, 2022

Rolling Stock: Two New Central PSUs in the pipeline

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New Delhi: Earlier the Railways had planned to launch a mammoth rolling stock company in order to bring Indian Railways manufacturing of all locomotives, carriages, wagons, and other vehicles used on a railway under one umbrella but now there can be some change in the mega plan. According to sources, a new proposal that is being seen as the biggest reform in the Railways to form two new Central PSUs as holding companies separately for coach and engine production will soon come for inter-ministerial consultation.

For now, 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. The second central PSU would is aimed at setting up of a new Indian Railway Motive Power Company to own and manage locomotive factories like Chittaranjan Loco Works and Diesel Loco Works, Varanasi, and those in Madhepura and Marhowra in Bihar.

Highly placed sources with Indian Railways said the top management of the Railway Ministry feels 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. At the same time, some of the officials believe that putting all rolling stock manufacturing under one umbrella by forming a single holding company, like China, would counteract against "departmentalism” that is deep-rooted in a public enterprise setup.

Current status

Sources said that the private consultancy firm that is studying the feasibility of the project had advised the setting up of two entities. 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. Initially, for five years IRRC will be 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. The idea behind having a corporatised entity is to propel India catch up with the rest of the world in terms of modern technological advances in rolling stock manufacturing.

"What is the need to create new central PSUs when the coach and loco factories are already doing well? The government recently bought the German-design Linke Hofmann Busch (LHB) coaches for Rs 5 crore each while Modern Coach Factory, Rae Bareli already producing it for Rs 2.16 Crore, then where do we lag in technology?"- Shiva Gopal Mishra, All India Railwaymen's Fedration

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.

ALSO READ: With privatisation of BPCL, HPCL, is govt handing RIL a monopoly?

Opposition

Railway unions, however, have already started protesting the idea of creating separate PSUs for manufacturing of rolling stocks. Shiva Gopal Mishra, Gen. Secretary of All India Railwaymen's Fedration alleged that this is the first step towards privatising precious rolling stock factories of the government. He questioned the intention of the government saying "what is the need to create new central PSUs when the coach and loco factories are already doing well? The government recently bought the German-design Linke Hofmann Busch (LHB) coaches for Rs 5 crore each while Modern Coach Factory, Rae Bareli producing it for Rs 2.16 Crore, the where do we lag in technology?". The Railway ministry has denied the claims made by the union.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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