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Indian Railways plan for rail import to fill shortfall from SAIL reaches PMO

Mar 9,2019

A recent report stated that the Indian Railways clash with the steel ministry over its rails import plan has reached the doors of the prime minister’s office, with both sides unwilling to compromise. Rail Minister want to import rails because it believes there is a shortage of steel being manufactured by Steel Authority of India, steel ministry, however, maintains the import plan is against the spirit of the Centre’s ‘Make in India’ campaign. Sources said that since the contentious issue has been boiling for some time, putting the government in a fix, the PMO now has to take a call to resolve it.


Grappling with accidents the railway has over the last year has undertaken a massive exercise of track renewal due to rail fracture. This involves replacing aging tracks on a priority basis – poor infrastructure is often cited as one of the most common causes of train accidents – and laying of new tracks. Railway ministry sources claim that SAIL has not been able to supply the rails as per its requirements and hence the transporter wants to procure it from global suppliers.


Accordingly, the railways its estimated 1.669 million tonne & 1.7 million tonnes requirement in 2018-19 & 2019-20 respectively and that SAIL has committed only to supply about 1 million tonnes in 2018-19 and 1.2 million tonnes in 2019-20. According to internal railway data, SAIL gave a commitment in March 2017 to supply 1.14 million tonnes of rails in 2017-18 but supplied only 0.875 lakh tonnes of rails. Accordingly, the railways sought exemption from the steel ministry and made preparations to float a global tender for procuring about 450,000 tonnes of rails from the international market.


However, a few months ago the steel ministry rejected the global purchase demand, saying that exemption is not granted. The steel ministry has maintained that under the government’s Make in India policy domestic players should be encouraged to meet the national transporter’s demand.


The clash between two wings of the government highlights the dilemma of the current regime, which wants to promote local production through the “Make in India” campaign but at the same time faces resistance from the state-run transporter because of the delivery failures on the part of state-run suppliers. The railway has maintained that past developments show that SAIL has not been able to meet the transporter’s requirements.


The dilemma is starker in the context that Modi government wants to overhaul the aging tracks of Indian Railways, which manages the world’s fourth-largest rail network, but shortages of rails manufactured by the SAIL has slowed down track renewal and the overall rail expansion plan.


As far as the other domestic player is concerned, the railway has given it an order of 90,000 tonnes of rails only as a ‘development’ order to Jindal Steel and Power. Jindal Steel and Power is currently a trial supplier and cannot be a regular supplier until the mandatory field testing trial is completed. There are strict procedures for trials suppliers because rails are the main component of railway track and have a direct bearing on the safety of the trains. The Research Design and Standards Organisation (RDSO), the railways’ research wing, lay down technical specifications and required technical eligibility criteria.