High speed train plan not enough to bring eco-system: Bharat Salhotra, Alstom Transport India MD

Written by Subhash Narayan | Updated: Sep 3 2014, 06:48am hrs
After making inroads into the energy market, French engineering and transport major Alstom now plans to give a major push to its transport business in India. The Narendra Modi governments plans to develop 100 smart cities and high speed train corridors have raised the companys ambitions in India. In an interview with FEs Subhash Narayan, Alstom Transport India managing director Bharat Salhotra talks about the new opportunities for the company. Excerpts:

Do you think high speed train projects are feasible for a price-sensitive country like India

High speed trains are definitely feasible. But to attain economies of scale, the government should not be talking about developing just one section but; say, 15. That is really the critical part, because when you talk about 15 sections or a larger number of sections, an entire ecosystem of suppliers and contractors starts to get developed. But if you are talking about one section, the cost competitiveness may not be much. And in a country like India, the focus should be on bringing down the cost of transportation. This can only be achieved through volumes.

Is this the reason why Chinese high speed trains cost the lowest

Yes, it is and the costs are lowered only when you have large volumes. China has achieved R89 crore per kilometre for high speed trains, with a speed of 160 to 200 km/hour. If we talk about 350 km/hour speed, the cost could go up to R130-140 crore. Smaller networks would be expensive as the fixed cost for the project remains the same whether you manufacture five trains or you manufacture 500 trains.

How geared is Alstom for bidding of these projects in the face of stiff competition from the Chinese and the Japanese

Technologically Alstom is a global leader in high speed rail. We have immense capability and competence to deliver these projects and have already running systems in several countries in Europe. When it comes to financing, its different, because we are an engineering company. We can design products, deliver projects, maintain them, even operate, but bringing in the funding, thats a different chapter. Ultimately, a project has to be based on a sustainable model.

Do you also think that higher volumes would propel companies like Alstom to consider setting up a manufacturing base here for high speed train

Transfer of technology, transfer of manufacturing, transfer of engineering skill-sets, all that happens when you have large volumes, unless there is a plan to develop an India manufacturing unit with a focus on catering to the export market. But that advantage is already lost, as a large part of export-oriented manufacturing has already gone to China.

Are there also issues regarding standardisation of the bidding processes for rail and mass transit systems

Yes, the bidding process and standardisation with respect to development of transport networks in the country remains highly fragmented. India is developing its urban transport network using different technologies and the bids are also invited for very small packages that at times does not get the kind of attention that is should ideally get. There should be some standardisation over the use of rolling stock first so that even bidders also take long term view of the requirements and place competitive bids.

Are you also looking to make the Sri City factory an export hub for neighbouring markets

This is part of our plan as we do not want this factory to service one big order and then wait for a long time to get another one. We are looking at markets in Australia, Middle East and Latin America.

Have you had any interaction with the new government

I think the government is making a good effort to consolidate first in the Railways and bring about some kind of structural changes within the organisation. Even the decision on FDI in railways would benefit from this restructuring. If it is able to restructure the Railways and improve its ability to execute projects in time, it would be a big positive. The Railways also need to move away from micro-procurement to procurement of sub-systems and systems, and rely on new technologies and new ways of doing things and new ways to maintain their systems and structures. That itself will bring a huge transformation. Then I think FDI will be an interesting thing.