Explained: Why Indian Railways Cancelled Alstom's Rs 30,000 Crore Vande Bharat Train Tender

In a surprising move, the Indian Railways has cancelled its Rs 30,000 crore tender for the manufacturing and maintenance of 100 aluminium-bodied Vande Bharat trains. French rolling stock major Alstom won the tender in June 2023.

Aluminium-bodied train sets were chosen for their lighter weight and energy efficiency compared to traditional stainless steel. The Indian Railways is keen on rolling out these advanced trains to enhance the speed, efficiency, and comfort of its services.

The first aluminium-bodied Vande Bharat trains are expected to be sleeper variants and are slated for rollout by the first quarter of 2025.

Who Were The Bidders?

Alstom India and a consortium of Swiss company Stadler Rail and Hyderabad-based Medha Servo Drives were the only bidders.

Both were technically qualified. While Alstom quoted Rs 150.9 crore for making one aluminium-bodied Vande Bharat with the sleeper facility and became the lowest bidder, Medha quoted Rs 169 crore and lost out to the former.

To qualify for the tender, companies were required to have a research and development (R&D) facility capable of manufacturing a prototype and assembling at least five train sets per year.

As per the Moneycontrol report, the contract specified the delivery of 100 train sets within seven years, with the winning bidder receiving Rs 13,000 crore upon delivery and an additional Rs 17,000 crore for maintenance over 35 years.

Trains were to be manufactured at the Railways' facility at Sonepat in Haryana.

Indian Railways had hoped for more participation, with companies like Siemens, Transmashholding, and Rail Vikas Nigam Ltd initially expected to bid. However, these companies did not meet the technical requirements, resulting in a limited pool of bidders.

What Led To The Cancellation?

According to railway officials, the tender panel found the French multinational Alstom's bid of Rs 150.9 crore per train set to be excessively high and requested that the price be lowered to Rs 140 crore.

However, Alstom India was firm on finalising the deal at around Rs 145 crore per train set.

Alstom had emerged as the lowest bidder for the Rs 30,000 crore tender, which was opened on 30 May 2023, and was set to manufacture all 100 Vande Bharat rakes.

Officials indicated that cancelling the contract allows the Indian Railways to secure more time to achieve the best possible price.

Additionally, it provides bidders with more opportunity to establish adequate manufacturing facilities. Previously, a contract to manufacture 200 Vande Bharat sleeper train sets made of stainless steel was awarded at Rs 120 crore per rake.

What's Next?

With the cancellation of this tender, the Railways will likely reissue the tender with revised conditions to attract more bidders. The focus will remain on ensuring that the selected manufacturer can meet the high standards of quality and innovation expected from the Vande Bharat trains, which have become a symbol of modern Indian rail transport.

These semi-high-speed trains, with their distributed traction power system, offer faster acceleration and deceleration, improved passenger comfort, and greater energy efficiency.

By ensuring the best possible price and technology for the aluminium variants, the Indian Railways aims to maintain the momentum of modernisation and expand the Vande Bharat fleet.