Centre's Rs 31,000 Crore Cargo Wagon Order Hindered By Supplier Defaults, Railways To Revise The Procurement Strategy

To expand the existing fleet of 300,000 wagons on the railway network, the Centre had placed orders for 79,800 wagons with seven suppliers in July 2022, marking the largest such procurement in terms of volume.

Titagarh Wagons, Texmaco Rail and Engineering, Hindustan Engineering Industries, Commercial Engineer and Body Builders (now Jupiter Wagons), Oriental Foundry, Besco, and Modern Industries were among the successful bidders.

However, as per a recent report by Economic Times, the Indian Railways will have to revise its plan, estimated at Rs 31,418 crore, as one of the suppliers, Modern Industries is unable to fulfil its order owing to labour unrest.

The wagons, crucial for transporting commodities like coal and iron ore, are priced between Rs 31.94 lakh and Rs 36.35 lakh each, depending on specifications.

Titagarh Wagons received the largest order of 24,177 units, followed by Texmaco Rail and Engineering with 20,067 units.

Modern Industries originally contracted to supply 9,242 wagons to the Indian Railways for Rs 3,776.35 crore, which was previously scaled down to 3,151 wagons valued at Rs 1,287.54 crore.

This adjustment was made under a force majeure condition invoked by a Railway Board order, with no financial penalties imposed on either party.

As of now, only 71 wagons have been delivered by the manufacturer.

Force majeure is a contractual clause that absolves liability in cases of unforeseen or unavoidable circumstances — in this case, labour unrest — that prevents a party from fulfilling their obligations.

To adjust for these changes, the Indian Railways plans to increase orders with other wagon suppliers, as confirmed by a senior railway ministry official.

The railway network, spanning 68,000 km, transports approximately 27 per cent of India's total goods.

According to reports, its figures have been steadily rising year-on-year. In the first nine months of FY 2023-24, the network transported 1,154.67 million tonnes of goods, a 4.1 per cent increase from the previous year.