Indian Railways eyes big reforms! India to have one of the world’s largest coach & engine production entities

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Published: October 29, 2019 12:55:11 PM

The new Indian Railway Motive Power Company will own and run factories like Diesel Loco Works, Varanasi, and Chittaranjan Loco Works and those in Madhepura and Marhowra in Bihar.

railwaysThe private consultancy company studying the feasibility of the project had recommended the setting up of two entities.

Indian Railways eyes big reforms! In a bid to make the production of coaches and engines more efficient, Indian Railways plans to form two new Central Public Sector Undertaking companies. The latest project proposal, which is being seen as a major reform in Indian Railways, will soon come up for inter-ministerial consultation, according to an IE report. Thus, the new Indian Railway Motive Power Company will own and run factories like Diesel Loco Works, Varanasi, and Chittaranjan Loco Works and those in Madhepura and Marhowra in Bihar. As part of the “100 days” plan approved by the Prime Minister’s Office (PMO), Piyush Goyal-led Railway Ministry is gearing up to establish the Indian Railway Rolling Stock Company (IRRC) to own and operate the coach-making plants- Modern Coach Factory (MCF) in Rae Bareli, to begin with, as well as the wheel factories.

According to sources quoted in the report, the Railway Ministry felt that by making two companies – one dealing in engines, which comes under the Electrical department and the other dealing in coaches, which is largely controlled by the Mechanical department, the project can be insulated from departmental rivalries. On the other hand, some officials feel that setting up a single holding company dealing in all rolling stock would serve as a more effective antidote to “departmentalism”, just like China. According to officials, the private consultancy company studying the feasibility of the project had recommended the setting up of two entities. Interestingly, even when divided, the two entities in terms of size as well as scale will be among the world’s biggest.

To begin the process, a Cabinet note is to be prepared to form IRRC and incorporate MCF with an authorized paid-up capital of around Rs 1,700 crore. Other large units will be included subsequently, like ICF, Chennai and RCF, Kapurthala, as well as the wheel plants. For the first five years, the IRRC will have its top brass, such as CEO and MD, appointed through the Railway Ministry. After the first five years, the selection process will be opened to the market and will be monitored by the Public Enterprises Selection Board (PESB).

According to officials, the key benefit of a corporatized company will be that India can catch up with other countries in terms of modern technological advances in developing railway rolling stock. Also, the entity can operate with a profit motive and join the global race of supplying to other countries around the world.

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