Indian Railways, a major consumer of steel in the country, is planning to adopt a zero imports policy in line with the government’s ‘Atmanirbhar Bharat’ initiative to promote self-reliance. The new policy is expected to relax norms for local vendors and suppliers and provide a level-playing field for both small and large steel producers in India.
The railways would aim for a complete ‘Make in India’ policy for steel components and gradually lower its dependence on imports to nil. This will boost domestic steel demand. In FY2017, railways’ imports were around 6-7pc of its overall procurement, which it aims to turn zero from the next financial year. Indian railways depend on three imported components, namely, track machines, wheels and axles. Dedicated domestic production capacities for the same have been set up and are in the final stages of commencement.
RINL is expected to be the major beneficiary of railways’ zero import policy as it expands its production capacity to become the largest supplier of steel components, including axles, blooms, billets. Davis learnt RINL’s dedicated unit for railways in Rae Bareli, with an annual capacity to produce 100,000 pieces of forged steel wheels, is expected to be commissioned, most probably, in the next quarter. The plant’s commissioning is delayed by travel restrictions amid the COVID-19 pandemic. Final checks by foreign experts are awaited and can be done on the resumption of international travel. On completion, this unit will cater to railways wheel requirements.
Another unit is being set up in Gujarat for track machines and axles supplies will be fulfilled by Rail Wheel Factory (RWF), Bengaluru.
Reduce imports from China
Indian railways had ordered 6,000 axles from CRRC Datong Company, China on May 6, for $4.47mn, according to local media. Earlier, railways had placed an order for 60,000 wheels worth $26.67mn with Taizhong Hong Kong International and a $3mn order with CRRC Yangtze Tongling to supply 4,000 axles and a $10.84mn order with CRRC Datong Company Limited for 15,000 axles.
In the next few months, such orders are likely to be offered only to Indian joint ventures and some domestic producers have set up new units to cater to this demand.