Priority projects include Metros
The Indian Railways’ budget for 2019-20 stands at Rs.1.59 lakh crore as it undertakes high priority initiatives such as electrification, rolling-stock upgrade and track expansion as well as new metros, according to an industry report.
IR had substantially stepped up capital expenditure from historical levels of Rs.40,000-50,000 crore per annum in the past to Rs.1.3 lakh crore in the last financial year, said the FICCI report released on 14 Jan 2020.
The 2019-20 budget increase is also as several metro projects in multiple cities are in various stages of execution, said the FICCI Capital Goods Committee report on ‘Opportunities for Capital Goods Industry with Indian Railways and Metros’.
FICCI report captures ‘Voice of Industry’ through inputs from industry players associated with Railways and Metro corporations.
Industry players expressed great enthusiasm to pursue opportunities with Railways and Metros with many targeting more than doubling of business over the next 5 years.
The industry players also appreciated the transparency in bidding and tendering processes while voicing the pain points they face vis-?-vis procurement policy and processes.
The report highlights 10 recommendations for policymakers to further facilitate industry participation in these opportunities.
– The recommendations include formulation of national railway plan, reforms in procurement policy and processes, strategic initiatives such as phased manufacturing program, expansion of PPP model to newer areas, and closer collaboration with industry for absorption of technology.
– The report identifies imperatives for industry which include de-risking business from over-reliance on Railways orders, forge partnerships with global technology players, promote self-certification, and ramping up of manufacturing and project execution capabilities.
– Business opportunities identified in the report can also play a critical role in ‘Make in India’ and job creation.
– The report estimates incremental manufacturing opportunity of Rs.28,000 crore per annum for the Indian Capital Goods industry.
– Fully capturing these opportunities will generate around 70,000 direct manufacturing jobs and a total of around 7 lakh indirect and induced jobs.
– On project execution side, FICCI report says that successfully achieving targets on track construction, electrification, high-speed rail, and dedicated freight corridors will generate a total project execution opportunity of about Rs.5 lakh crore for industry over the next 5-7 years.
– This will generate 60 to 70 lakh man years of employment during the construction phase of these projects, notes FICCI report.
“Industry participation is a must for next generation of upgrades and expansion in Railways infrastructure and network,” said Shailendra Roy, Chair of FICCI Capital Goods Committee.
“Policymakers should promote this through both strategic initiatives such as phased manufacturing programs, and policy and process reforms such as making procurement contracts compatible with global standards,” said Roy, also Member of the Board, Larsen & Toubro Ltd. fiinews.com