Negotiations have broken down! India cancels $3.64 billion locomotive and vehicle tender for Alstom

INDIAN Railways’ (IR) Rs 300bn ($US 3.64bn) tender for the manufacture of 100 sleeping car variants of the 220km/h aluminium-bodied Vande Bharat EMU has been discharged following the breakdown of price negotiations with Alstom, which emerged as the lowest bidder for the contract in May last year.

India had been hoping to speed up the introduction of the next-generation Vande Bharat EMUs. In her budget speech for 2022-23, finance minister Ms Nirmala Sitharaman announced that 400 new Vande Bharat sets would be constructed by 2025-26. So far, approximately 90 seating-only trains have been manufactured. Of these, 75 are currently operational on the mainline network.

Alstom refused to reduce its final offer price of Rs 1.5bn per set to Rs 1.4bn requested by IR. The only other bidder was the Hyderabad-based Medha Servo Drives, which quoted Rs 1.7bn per train. According to the tender, the preferred bidder would also agree a 35-year contract for maintaining the new fleet.

“Alstom made a very competitive offer to IR, given that the manufacture of these state-of-the-art aluminium trains required substantial initial investment in the product design, as these would have been the first such product for the Indian market,” says an Alstom company spokesperson. “The process would also have involved the creation of a local supply chain to make India completely self-reliant.”

The breakdown of 

the tender negotiations comes just two months after IR withdrew from discussions with Japanese manufacturers for new trains on India’s first high speed line due to cost issues (IRJ July, p18). The operator instead placed an order for two prototype sets, based on the Vande Bharat platform, with state-owned Integral Coach Factory (ICF).

With IR sources claiming there are no immediate plans to issue a re-tender, there is uncertainty as to whether the railway will pursue the idea of introducing the lightweight and energy-efficient aluminium-bodied EMUs. “We are currently focusing on manufacturing stainless steel models and trials for these will begin this month,” an official says.

IR aims to deploy approximately 250 Vande Bharat sleeper variants in the next five years and a prototype train, manufactured by Bharat Earth Movers, is reported to be ready. “We will focus on indigenous models,” another official says.

Former ICF general manager Mr Sudhanshu Mani, known as the inventor of the Vande Bharat, told IRJ that he suspects IR might have decided to abandon the aluminium-based construction project altogether, in the same way it abandoned proposals for an aluminium version of Vande Bharat, then known as Train 18, in 2018. He suggests IR should have negotiated more before cancelling the tender, as he believes it will be difficult for the railway to achieve a lower price in the future.

Stainless steel

A joint venture of IR subsidiary Rail Vikas Nigam and Russia’s Transmashholding is currently manufacturing 120 stainless steel Vande Bharat trains at the Marathwada factory at Latur in Maharashtra.

At the same time, a consortium of Titagarh Rail Systems and state-owned Bharat Heavy Electricals is building 80 stainless steel sets for Rs 1.2bn per train. Manufacturing is taking place at ICF’s state-owned facility in Chennai. The trains are expected to be deployed on IR’s main line network by 2029.

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