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Railways-Steel Ministry Fight Over Import Plan Reaches PMO

Railways-Steel Ministry Fight Over Import Plan Reaches PMO

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Published on 11th March, 2019

New Delhi: The Indian Railways’ clash with the steel ministry over its rails import plan has reached the doors of the prime minister’s office (PMO), with both sides unwilling to compromise.

The national transporter wants to import rails because it believes there is a shortage of steel being produced by state-run Steel Authority of India. The steel ministry, however, maintains the import plan is against the spirit of the Centre’s ‘Make in India’ campaign.

Grappling with accidents due to rail fracture, the railways has over the last year undertaken a massive exercise of track renewal. This involves replacing ageing 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 recently sought exemption from the steel ministry and made preparations to float a global tender of Rs 2,200 crore for procuring about 4.5 lakh tonne of rails from the international market.

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

Sources say that since the contentious issue has been boiling for sometime, putting the government in a fix, the PMO now has to take a call to resolve it.

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

The railways has maintained that past developments show that SAIL have not been able to meet the transporter’s requirements.

For instance, it has estimated that there would be a requirement of 16.69 lakh tonnes of rails in 2018-19 and 17 lakh tonnes in 2019-20 for track renewal as per the rail expansion programme that has been finalised. However, SAIL has committed only to supply about 10 lakh tonnes in 2018-19 and 12 lakh tonnes in 2019-20.     

According to internal railway data, SAIL gave a commitment in March 2017 to supply 11.4 lakh tonnes of rails in 2017-18. This however was revised to 9.2 lakh tonnes on September 27, 2017 and again revised to 9.5 lakh tonne on October 26, 2017. Finally, for 2017-2018, the state-run enterprise supplied only a total of 8.75 lakh tonnes of rails.

For the year 2018-19, SAIL had given an original commitment of 15 lakh tonnes. However, this was eventually downgraded to 10 lakh tonnes in October 2018.

In 2016-17, the railways got 6.20 lakh tonnes against the demand of 8.25 lakh tonnes and in 2015-16, the supply was 6.46 lakh tonnes as against the demand of 8.12 lakh tonnes rails.  

As far as the other domestic player (Jindal Steel and Power) is concerned, the railways has given it an order of 90,000 tonnes of rails only as a ‘development’ order.  

JSPL is currently a trial supplier and cannot be a regular supplier till the mandatory field testing trial are completed. There are strict procedures for trials suppliers because rails are the main component of railway track and has a direct bearing on the safety of the trains.

The Research Design and Standards Organisation (RDSO), the railways’ research wing, lays down technical specifications and required technical eligibility criteria.

However, to promote Make in India programme, it was ordered that domestic manufacturers be  given the opportunity to establish itself and therefore JSPL was considered for placement of a development order of up to 20% of net procurable quantity.

The rails supplied under developmental order are to be observed and monitored as per technical regime prescribed by RDSO because rails as a steel product is different from others steel products such as pipes and coils. 

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