Investing in Indian Railways (IR): Privatizations Offers Bankable Opportunities

 

 

Indian Railways (IR) with a total network of 123,000 KMs is one of the largest logistic companies in the world. So far private sector participation in IR has been limited. However, GOI has recently opened private participation in running passenger trains. Besides, there are also lucrative opportunities available in infrastructure, track renewal, & technology products. Read the analysis by IW to know more.

 

 

So far, there has been limited involvement of private players in Indian Railways (IR), compared to other infrastructure development such as aviation, ports, roadways, & industrial clusters. IR, which is also one of the biggest railway lines in the world, has been a state-run enterprise.

However, this is going to reverse soon, as GOI is systematically opening it for more active private sector participation including foreign investors. In the times to come, private investments in passenger trains, railway infrastructure development & maintenance, & technology are expected to see a jump.

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Private Participation in Passenger Trains

Indian Railways (IR) in coordination with NITI Aayog, a GOI backed think tank have decided to operate around 150 private trains across an indicative list of around 100 routes. These routes include Kolkata to New Delhi, Mumbai to New Delhi, Patna to New Delhi, Lucknow to Jammu, etc. Numerous enterprises including L&T Infra, Siemens AG, GMR, Bombardier,  Alstom, Sterlite, etc. have shown keen interest to operate passenger trains.

The identification & selection of the operator will be based on following a two-step process of Request for Proposal (RFP) & Request for Qualification (RFQ).

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IR plans to conclude the bidding process by FY 21. Twelve routes are expected to become operational by FY 23.

Railway Network Renewal & Maintenance

There are also profitable opportunities in track renewal and maintenance, as IR is aggressively upgrading its track infrastructure. Earlier, IR used to source rails from the state-run Steel Authority of India Limited (SAIL). However in 2018, for the first time, it issued a global tender worth USD 360 million. Alongside domestic manufacturers, JSPL, numerous international bidders such as CRM Hong Kong, British Steel France Rail, East Metal, Voestalpine, etc. participated in the bid.

As GOI has announced a USD 2.2 billion plan to renew existing tracks, more private sector involvement will be seen. Alongside rail manufacturers, this will unlock opportunities for prestressed concrete sleeper companies, mechanized renewals, and much more.

Opportunities for Technology Solution Provider

There will be ample opportunities for technology solution providers in IR as there is an increased appetite for improved technologies in asset management, cybersecurity, passenger service & safety, data & analytics, etc. IR announced to spend around ~ USD 1.5 billion in technology upgrades to optimize asset utilization, improve turnaround time, and ensure better passenger ssafety.

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How India Watch can Help

As a preferred medium for mass transit and freight transport in a nation like India with over 1.2 billion population,  Indian Railways or IR offers lucrative investment opportunities. Moreover, the Government is also reforming existing policies & reducing dependence on public players. This will further unlock high yielding investment potential not just in operating passenger trains but throughout the value chain.

However, to identify potential opportunities and make informed decisions, one needs to have access to quality information & actionable insights. As an India focused information advisory, we can offer a host of valuable services including but not limited to potential assessment, tender management, competition analysis, vendor analysis, subcontractor analysis, & numerous other market intelligence.   

For further information, feel free to connect with us at Info@theIndiawatch.com