Indian small and medium-sized enterprises (SMEs) can play an important role in railway sector manufacturing, said a new report by Ernst & Young, in association with Federation of Indian Chambers of Commerce & Industry (FICCI). The report titled ‘Railway sector – A key driver for Make in India program’ which highlights the major role that the Railways sector plays in the Make in India program highlighted that it is essential for the SME sector to get due consideration and a hand-holding assistance as the railways sector moves up the technology curve.
The Indian Railways is focusing on many themes such as modernization of existing tracks, new generation locomotives, train sets for high speed inter-city travel, high-speed railway lines, deployment of on-board train protection system with cab signalling, according to the report.
As Indian Railways modernizes and upgrades its technology, this would be a key driver to enable India to become the manufacturing base for railway equipment and boost the Make in India program.
Rajaji Meshram, Partner, Transaction Advisory Services, EY said while the exports from India related to railway sector is to the tune of USD 350 million, the exports related to automotive sector is around USD 17 billion. ''India, given its large railway manufacturing expertise, needs to get a larger pie in the global rail market,'' he said.
Meshram said Railway sector procurement was predominantly done by the Government and the large railway market of India gives the Government the due leverage for putting in local manufacturing conditions. ''This has been successfully done in the case of the locomotive factories at Marhowra and Madhepura,'' he added.
The report suggests some key aspects that SMEs need to focus on to upgrade to all the advancements that a modernized railway system can speak of:
SME Readiness: A mix of indigenous innovations and technology transfers will help upgrade railways technology. If new designs are brought to the fore by railway production units, the real test would be to gauge the readiness of SMEs to supply as per the new specifications.
Skilling and technology upgrade of SME: After assessing the existing vendor base, a program to scale up the SMEs in technology and skilling needs to be in place. Making SMEs aware of the required tool sets, manufacturing methods and processes will be crucial.
Financial assistance to SMEs: Access to financial support for SMEs remains a major hurdle. At present no program exists that can offer such assistance to the SMEs in the railways sector. This aspect needs to be looked at from a renewed seriousness with newer technologies being introduced in the railways.
India’s SME manufacturing ecosystem will need to eventually match the pace with the Indian railways targeting improved speeds, safer operations and higher payloads in the times to come, said the report.