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If India becomes self-reliant in railway technology, it will have multiple effect including reduction in the equipment cost, easy availability of technology for upgradation of existing assets and in turn Indian Railways will be able to reduce the freight rates, thereby attracting its lost traffic back, writes Mohit Sinha.
Indian Railways (IR) is the fourth largest railway network in the world in terms of route kilometre behind only the US, Russia and China. IR’s Corporate Mission is to be Modern Railway System with sufficient capacity to meet the country’s transportation needs, at least cost to society while maintaining financial viability.
Looking at the size and the place of IR in the global context, India should be a net generator of new technologies instead of a constant borrower. This should be true looking at the technological strides that India has made in almost all other sectors. However, for the past 60 years including post liberalisation, the country has been using archaic business models such as Transfer of Technology, which doesn’t have the impact that should have happened in terms of making IR or its equipment industry more self sufficient.
To achieve the above objectives, IR would have to re-think about a self-sustaining business model of Transfer of Technology and about the structure of production units like Diesel Locomotive Works (DLW), Chittaranjan Locomotive Works (CLW), Integral Coach Factory (ICF) and Rail Coach Factory (RCF). While this structure can be revised, it is clear that IR may have to retain a significant share in ownership of these units to safeguard its own interests. Indian railway equipment manufacturers should get more closely involved with these units to obtain necessary toehold for becoming eventual leaders in areas of specific assemblies.
Why India is technologically not advanced in rail-related technologies?
One of the widest methods of procurement of high-end technology in IR is through ‘Transfer of Technology’ method. The problem with this type of procurement is that even though the technology comes in a way, it does not allow local industry to flourish in terms of manufacturing of individual components.
In indigenous procurement by IR, mostly Railways provides the industry with detailed specifications, standards and drawings with respect to the materials being procured. Though this helps in getting the equipment in line with the drawn up specifications, this method hinders any possibility of innovation in the product. More and more industries and sectors are moving towards output-based procurement where the desired output is outlined by the procuring agency and the design, materials etc, are left to the justice of entity manufacturing the product. If this approach is followed by Railways, there would be more opportunity for innovations moving into railway technology.
Why is technology important?
The importance of technology upgradation by IR can also be seen in the recommendations of various committees formed to analyse the current situation of IR. The Committee on Modernisation of Railways has adopted recommendations with respect to technology upgradation in track and bridges, signalling, rolling stock, and stations and terminals.
The cost of importing technology is high and in turn increases the cost of the imported product. If the cost of the products is high, the end-product, in the case of railways the cost of transportation of goods, automatically increases. If we look at the freight rates in India, they are, as it is, being used to subsidise the passenger fares and are amongst the highest in the world. IR is losing the freight share to other modes of transport due to several issues including capacity constraints and high freight rates among many. Hence, it is imperative for IR to reduce its reliance on imported technologies. In case India becomes self-reliant in railway technology, it will have multiple effects including reduction in the equipment cost, easy availability of technology for upgradation of existing assets of IR and in turn it will be able to reduce the freight rates, thereby attracting the lost traffic back to rail mode of transport.
As on date, IR is facing severe constraints on its existing infrastructure and thereby losing freight to other modes of transportation mainly to roads (refer box on the right).
Bringing it back on track
Making international leaders committing to Indian operations: Although India should focus on indigenous development of technology, it will take some time for the Indian rail technology industry to mature. A shortcut route to the same can be allowed international leaders in technology to set up shops in India through joint venture with Indian industrial units. This will make the international companies to procure the individual components locally (to control the cost) as well as develop the local industry.
Increase in traffic vis-à-vis increase in procurement activity: Although increase in volume of traffic plying on railways is directly proportional to the procurement of railway equipment, there is merit in creating capacity in advance in anticipation of the increased level in volume of traffic. Increase in the procurement activity can go a long way in getting the industry revitalised.
Bringing in design and build standard in railway equipment industry: It is extremely important for IR to shift from input-based specification to output-based specification in procuring equipment from the local industry. The output-based specifications are being used in many other sectors and should be followed by Railways also. This will encourage innovation in the equipment industry.
Objective and transparent divestment in railway manufacturing units: Although it is important for IR to control the critical manufacturing entities such as DLW, CLW etc, a controlled divestment will bring in the much needed cash on the table along with opening of new avenues for bringing in advanced technology in these units.
Maintenance activity to be outsourced thereby exposing the industry to actual on-ground activities: The maintenance activity in IR has always been closed for participation by private sector entities. Although the policies on private sector participation allow for maintenance by private entities, the same is yet to happen in a big way. The participation of private sector entities in maintenance of the equipment provided by them will cause the manufacturers to get direct feedback on quality and reliability of their equipment, thereby enabling to have the option in improving their equipment on a continuous basis.
Setting up of the state-of-the-art Indian Institute of Railway Research with Centres of Excellence: The Expert Committee for Modernisation of IR had recommended setting up of Indian Institute of Railway Research with centres of excellence in the areas of Safety, Wagon Prototyping, Mechatronics, Green Toilets etc.
It is extremely important for IR to adopt this recommendation along with others under the head of indigenous development. The other recommendations included upgradation of existing railway R&D facilities, upgradation of indigenous manufacturing facilities such as foundry for higher axle load bogies, development of Indian Standards, critical vendors and protocols for IR and enhancement of university interface with Railway Laboratories in academic institutions.
As has been provided in the report, “A focus on strengthening indigenous capabilities will increase local production and domestic manufacturing as well make India a hub for technology, equipment and services export globally”. The new R&D facility can be jointly set up by the Ministry of Railways, top tier academic institutions such as Indian Institute of Technology and Railway Equipment Manufacturers.
The development of these facilities will go a long way in making India self-reliant in railway technologies.
The supply of BOXN wagons, (the wagon used to carry coal and other commodities), is under serious crunch because of low availability and logistical problems owing to wide geography of our country. We are using the example of coal as it is the largest user group of BOXN wagon.
Moreover, looking at the projection of supply of BOXN wagon by IR and the projection of requirement of imported coal in the country, the supply is expected to become worse.
While the BOXN wagons are slated to grow at a CAGR of 6 per cent, the import of coal is going to grow at 10 per cent, thereby increasing the gap between the supply and demand of the wagons.
Though the problem looks acute, the solution can be simply through intervention of technology. If the axle load ratio and the carrying capacity of the wagons can be increased from the current standard, the same number of wagons will be able to carry more volume of the cargo, thereby increasing the efficiency of the wagons.
Source: Feedback Research
The author is Senior Manager – Advisory, Transportation Division, Feedback Infrastructure Services.