Indian Railways Cancels Tender for 100 New Vande Bharat Trains Worth $3.64 Billion: What Went Wrong?

Indian Railways (IR) has canceled a major tender worth 300 billion rupees ($3.64 billion) for the procurement of 100 new Vande Bharat trains with sleeper cars, this is reported by the railway transport news portal Railway Supply.

The leading contender for the contract was the French industrial giant Alstom, but negotiations between the parties reached an impasse.

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The main reason for the breakdown in negotiations lies in the financial demands of Indian Railways.

IR insisted on reducing the cost of each train from 1.5 billion to 1.4 billion rupees (from $18 million to $17 million), which would have significantly lowered the total contract amount.

However, Alstom refused to make concessions, citing the need for large initial investments in establishing production in India and creating supply chains for the new type of trains.

The French company deemed these conditions inconsistent with the real cost of the project and believed they would jeopardize its profitability.

According to Sudhanshu Mani, former Managing Director of Integral Coach Factory and initiator of the Vande Bharat project, the decision to cancel the tender may indicate IR’s intention to abandon plans for aluminum trains.

He noted that revising the tender conditions is unlikely to lead to a reduction in the cost of the trains, especially given the current market conditions.

The tender application process began in June 2022, and companies submitted their proposals in February 2023.

In addition to Alstom, the Indian company Medha Servo Drives, based in Hyderabad, also participated in the tender.

However, its offer was even more expensive—1.7 billion rupees ($20 million) per train—making it less competitive.

The cancellation of the tender creates uncertainty in the implementation of the Vande Bharat project, which was initially seen as an important step in modernizing India’s railway infrastructure.

The question of whether Indian Railways will be able to find a new supplier who offers more favorable terms remains open.

Photo: PTI

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