India Mulls PLI Scheme For Train Parts To Attract Foreign Manufacturing Firms, Reduce Imports: Report

The government reportedly plans to introduce a production-linked incentive (PLI) scheme for train component makers in a bid to attract foreign manufacturing firms and reduce reliance on imports.

To work on the the details of the PLI scheme, a consultancy firm will be selected through a bidding process this month, Economic Times reported citing sources.

The selected consultant will compile a list of components that are predominantly imported and used in the production of engines and coaches, also known as rolling stock.

Under the PLI scheme, the government provides incentives based on the output of products that are usually imported.

The scheme being mulled for the Railways is in line with the government's plan to have only two types of passenger coaches: Linke Hofmann Busch (LHB) and Vande Bharat, instead of the current 28 types.

Introduced in 1999, the LHB coaches have an import component of around 1.5 per cent. However, in the Vande Bharat trains, this import component is estimated to be around 15 per cent.

According to an official quoted in the ET report, the focus will be on evaluating the export potential of Vande Bharat trains and determining the necessary measures to localise the components used in the train.

By promoting local manufacturing of components, the maintenance cost of these coaches can be reduced significantly.

The official said that this PLI programme will incentivise the establishment of new manufacturing units or the expansion of existing ones to produce coach and engine parts that are currently imported.

Despite the railways' ongoing demand, India still relies on imports for critical components of rolling stock, including wheels and axles.

In the most recent contract awarded in April, China's TZ (Taizhong) Hong Kong International Ltd. was chosen to supply 33,000 LHB wheels, along with other parts.

Bonatrans India, based in Aurangabad, also received an order but this was reportedly importing black forged axles from Railteco, China, and then machining in India.

To reduce the need for imports, the railways have recently placed an order for 1.54 million forged wheels that will be manufactured within the country.

The demand for Vande Bharat and LHB components is expected to increase significantly in the country, another official was quoted in the ET report as saying

According to the official, there will be 4,500 VB trains operating in the country by 2047.