Abstract
In line with the Government of India’s focus on Make in India, the Ministry of Housing and Urban Affairs (MoHUA) became the first ministry to issue Phased Manufacturing Plan (PMP) for indigenous procurement of metro rail components. Accordingly, the specification of various components has been standardised to engage and encourage long-term investment in the fast-growing metro-rail sector, which already has 657 km of operational lines in eighteen cities along with more than 800 km of metro rail projects under construction in twenty-seven cities. India is now almost self-sufficient for power supply traction and track material. Further, MoHUA has successful negations with JICA (Japan International Cooperation Agency) and ADB (Asian Development Bank) to encourage indigenous production and assembling for the upcoming Chennai Metro and Mumbai Metro. MoHUA has also issued Metro Rail Policy 2017 to focus on systematic planning and imple-mentation and guide state governments with emphasis on standardisation and indigenisation of metro technologies keeping in view import substitution, export promotion, sustainability and cost-reduction (Ministry of Housing and Urban Affairs, 2017).
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Introduction
India is emerging as one of the fastest growing economies in the world and is expected to be among the top three economies over the next 10–15 years, backed by its strong democracy. A planned approach to transform India into a global design and manufacturing was a much-felt need and ‘Make in India’ is a timely response towards this goal.
Hon’ble Prime Minister articulated ‘Make in India’ during his Independence Day speech in the year 2014. This initiative was launched to bring a complete change of the Government’s mindset—a shift from authority to business partner relationship, in keeping with Prime Minister’s tenet of ‘Minimum Government, Maximum Governance’ which quickly became an opportunity to achieve dreams for innumerable stakeholders and entrepreneurs.
‘Make in India’ is a national programme of the government designed to make India, a self-reliant country and to give the Indian economy a global recognition. This initiative facilitates investment, fosters innovation, enhances skill development, job creation and builds best-in-class manufacturing infrastructure in the country. A powerful and galvanising ‘Make in India’ is an invitation to potential partners and investors around the world. It represents a comprehensive and unprecedented overhaul of the business-as-usual mindset. The initiative has opened investment in various sectors such as defence, railways, metro rails, space, transport, etc.
Urbanisation is taking place at a very rapid pace in India and it reflects the poise towards economic development of the country. This can be gauged from the fact that India is projected to add about 500 million people to its urban population in the next 35 years. This means that the next one generation alone will see a ‘more than doubling’ of the urban population. A direct impact of this burgeoning urban population would be on the demand for urban transport infrastructure which is a crucial facet of urban planning and development. Transport is an underlying force in the location, growth, rank-size and functional differentiation of cities. Well-organised, inexpensive and efficient transport facilities act as enablers in enhancing the economic and social fabric of our cities and towns. Thus, transportation, both inter-city and intra-city, is a prime concern for both urban and transport geographers.
Metro Rail—A Journey Towards a New Beginning
Evolution of metro rail in India is indeed, a breath-taking story. Starting with the underground metro railway system in Kolkata in 1984, the metro rail has come a long way. With the inauguration of the first modern metro line in Delhi in 2002, today over 657 km of metro lines are operational in eighteen different cities, namely Delhi & seven NCR cities (375 km), Bangalore (42 km), Hyderabad (56 km), Kolkata (27 km), Chennai (45 km), Jaipur (9 km), Kochi (18 km), Lucknow (23 km), Mumbai (20 km), Ahmedabad (6.5 km) and Nagpur (13.5 km). More than 800 km of metro rail projects are under construction in twenty-seven cities including Delhi & NCR, Mumbai, Kolkata, Bangalore, Chennai, Kochi, Jaipur, Hyderabad, Nagpur, Ahmedabad, Lucknow, Bhopal, Indore, Patna, Agra, Kanpur, Surat and Pune. In next few years, many more cities like Guwahati, Ranchi, Meerut, Chennai, Chandigarh, Visakhapatnam, Thiruvananthapuram, Kozhikode, etc., will get added as they are also planning the construction of metro rail networks.
In addition to the above, Regional Rapid Transport System (RRTS) has been introduced for the first time in the country to decongest Delhi & NCR. It is a rail-based electrified high-speed, high-frequency transit system with an operational speed of 160 kmph. The first phase of RRTS consists of three corridors, covering a total length of about 380 km. This transit system will connect Delhi with Panipat, Alwar and Meerut. Recently, Hon’ble Prime Minister laid the foundation of Delhi–Meerut corridor. Once operational, RRTS will be the fastest, comfortable and safest mode of commuter transport connecting Delhi, and urban nodes together in the National Capital Region. It will cover 82 km in just 49 minutes with sixteen intermediate stoppages between Meerut to Delhi.
Make in India Initiatives
The ‘Make in India’ initiative has been built on layers of collaborative efforts. To encourage indigenous manufacturing and production of goods and services, the Department of Promotion of Industry and Internal Trade (DPIIT) initiated the process in December, 2014, by bringing together Secretaries of various Ministries to the Government of India and industry leaders on a common platform to formulate an action plan to raise contribution of the manufacturing sector to 25 per cent of the GDP by 2020. In 2017, DPIIT issued Public Procurement (preference to Make in India) Order as a part of the policy of Government to encourage ‘Make in India’ initiative (Ministry of Commerce and Industry, 2017a).
Accordingly, in pursuance of the said order, the Ministry of Housing and Urban Affairs (MoHUA) initiated steps for its implementation immediately. MoHUA became the first Ministry to issue the Phased Manufacturing Plan (PMP) for indigenous procurement of various metro rail components. The aim of PMP is to increase minimum local content in rolling stock, telecom and signalling to 50 per cent by 2023 in a phased manner. It was planned to get 80 per cent of civil work involved in the metro rail project and 50 per cent of electrical items to be procured indigenously right away.
The ‘Make in India’ initiative in metro rail projects, not only focuses on promoting domestic entrepreneurship, but also creating a conducive environment for investment by global players in the country. To fulfil this objective, directions have been issued to all metro rail corporations for the procurement of rolling stock that ‘minimum 75 per cent of the tendered quantity shall be manufactured indigenously with progressively increased indigenous content either by establishing facility in India or in partnership with Indian reputed manufactures’. A standard eligibility criterion for procurement of rolling stock was firmed up by the Ministry to ensure that local manufacturers become eligible and compete with the global manufacturers in quality, cost and timely supply (Ministry of Housing and Urban Affairs, 2018).
In order to promote indigenisation and reduction in cost, the specifications of various metro rail components like rolling stock, signalling and telecom systems, electrical and electromechanical systems and civil engineering structures have been standardised (Ministry of Housing and Urban Affairs, 2017; 2018). These standards will ensure that metro rail subsystems for all new metro projects conform to the prescribed standards and thus encourage manufacturers to set up their units in India eyeing the enormous future prospects and the economies of scale provided by the large-scale production of standard products. Specific steps for promoting ‘Make in India’ have been stipulated in these standards.
tandardisation of metro rail system has, therefore, incentivised manufacturers to plan for long-term investments in the country and set up manufacturing units. M/s Bombardier has set up a greenfield plant for manufacturing modern state-of-the-art metro cars at Savli, near Vadodara in Gujarat. M/s Alstom has set up their greenfield facility at Sricity near Chennai. The state-of-the-art facilities for manufacturing of metro propulsion equipment (IGBT-based) has been set up by Bombardier (India) and Alstom (India) in the country. Several other ancillary factories have been set up in India.
MoHUA has launched indigenously developed ‘One Nation, One Card’-based on National Common Mobility Card (NCMC) specifications to enable people to pay multiple kinds of transport charges, including metro services and toll tax, across the country. This inter-operable transport card runs on RuPay card and would allow the holders to pay for their bus travel, toll taxes, parking charges, retail shopping and even withdraw money from ATMs.
The interface specifications of the NCMC Ecosystem were drawn by the C-DAC and National Payments Corporation of India (NPCI). NPCI has defined the card specification (qSparc) including Card-Validation Terminal Interface and C-DAC has defined the interface specifications of Automated Fare Collection (AFC) Systems, which comprises various parts as Validation Terminal-Mechanical Gate Interface, Validation Terminal-AFC Interface and AFC-Bank (acquirer) Interface. This is the first Indian specifications of its kind.
The metro entry and exit gates which form an important component of the metro AFC systems has been the mainstay of some five to six foreign companies who provide proprietary solutions and therefore are costly initially for procurement and thereafter for operations and maintenance (O&M). Bharat Electronics Limited (BEL) was roped in this exercise and they have successfully designed and manufactured metro gate indigenously, which has been tested for international standards by an EMVCo accreditation agency based in France. This breakthrough will not only bring down the cost of the AFC systems and enable interoperability on account of open-loop standards but will boost India’s self-reliance in techn-ology and export. We are now among very few countries which have developed such complete ecosystem indigenously.
Metro rail projects are capital intensive, which requires a very high level of technology for efficient and safe operation. Unless standardisation and indigenisation are taken up seriously and vigorously, it will not be possible to reduce the cost of metro rail projects. Today, for most of civil work, no foreign assistance is required. Similarly, for power supply and traction and for track material (except rails), we are almost self-sufficient. However, for signalling and telecommunications, a vital safety area, we entirely depend upon on foreign manufacturers not only for design, supply of software and hardware, but even for installation, testing and commissioning. If we are able to master the technology in this field, particularly in the areas of electronic hardware and software, we will be able to reduce the cost of metro rail projects by 15 per cent. Therefore, MoHUA, along with DMRC, BEL and C-DAC has taken up the project for creating indigenous standards for Communication-Based Train Control (CBTC).
All the above actions by MoHUA have created an enabling environment for indigenous metro rail development.
Most of the metro rail projects have been financed by the central government in partnership with the State governments, while some have been funded by the State governments either on their own or with private partnership. In addition, an external loan has been taken under a sovereign guarantee. The external lending agencies have their own terms and conditions of financing the metro projects. MoHUA took up the issues relating to the implementation of ‘Make in India’ initiatives in the metro components funded by external lending agencies. With vigorous efforts, Ministry has successful negotiations with Japan International Cooperation Agency (JICA) and Asian Development Bank (ADB) for incorporating ‘Make in India’ itiatives in their terms and conditions of financing as follows.
Negotiation with Japan International Cooperation Agency (JICA) for Operational Rules for Loan for Chennai Metro Phase II Project
In May 2018, JICA issued operational rules for special ODA loans for metro and railway projects in India. These rules were to be applicable on metro projects to be funded by JICA. The country of origin of goods and services was structured in three groups of 30:30:40 ratio from the Japanese company, Indian company and open to all, respectively. The definition of Indian company in the rules was making Indian companies like Alstom (India), Bombardier (India), etc., ineligible for competing in the tenders for the metro rail system. In a nutshell, the JICA operation rules were in contrary to the spirit of ‘Make in India’. MoHUA took initiative and led the discussion with Japanese counterparts involving Department of Economic Affairs and Ministry of Finance. After a series of discussions, JICA agreed to:
Including rolling stock in the items which constitute approximately 30 per cent of the loan amount to be procured from Japan. Such packages including that for rolling stock, which will contribute nearly 30 per cent of the loan amount, have been identified and appended to the record of notes of discussion. Encourage Japanese rolling stock manufacturers to assemble 75 per cent of the rolling stock in India either through collaboration with companies based in India or by setting up an independent manufacturing unit in India. The Indian side will share the recently awarded rates of rolling stock with Japanese side which would, in turn, be shared with the Japanese rolling stock manufacturers for enabling competitive rates. For the items procured from the remaining portion of the loan (i.e., nearly 70 per cent of the loan amount), the provisions of PPO (MII) 2017 will apply. Such procurements will ensure that the Indian companies promoted by foreign manufacturers in India are not excluded from bidding for these packages.
Negotiation with ADB for Inclusion of Indian Companies in the Eligibility Criteria for Procurement of Rolling Stock for Mumbai Metro Line 2A, 2B and 7
Rolling Stock of Mumbai Metro Line 2A, 2B and 7 being implemented by Mumbai Metropolitan Region Development Authority (MMRDA) have been funded by Asian Development Bank (ADB). Initially, ADB was not agreeable for incorporating ‘Make in India’ provisions in the procurement. After several rounds of negotiations held between MoHUA and ADB, the eligibility criteria was restructured in such a manner that indigenous companies like BEML and Titagarh Limited apart from Alstom (India) and Bombardier (India) became technically eligible to participate in the tender floated on international competitive bidding model. BEML bagged the order for 378 coaches at a cost of ₹30,150 million totally on its own competence in collaboration with a Japanese company for design capability. The award price per coach which is less than ₹80 million (including spares, design, installation and commissioning) is recorded as the lowest in recent times. Seven International manufacturers of rolling stock, namely Alstom, Bombardier, CAF, CRRC, Titagarh, BEML and Hyundai Rotem had participated in the bid.
Negotiation with JICA for Inclusion of the Condition of ’75 per cent Coaches to be Manufactured in India’ in the Eligibility Criteria of Rolling Stock Tender for Mumbai Metro Line 3
Mumbai Metro Line 3, the project implemented by Mumbai Metro Rail Corporation Limited (MMRCL), a 50:50 joint venture of Government of India and Government of Maharashtra is funded by JICA. MoHUA successfully negotiated with JICA to include the condition of minimum 75 per cent of the coaches to be manufactured in India in the Request for Proposal (RFP). By doing so, whichever company bags the order had to manufacture at least 75 per cent coaches in India and this was a big step towards ‘Make in India’. The tender was floated by MMRCL on international competitive bidding model and the contract was awarded to the consortium namely M/s Alstom Transport India Limited and Alstom Transport S.A. who committed to manufacture 100 per cent of the contract quantity in India.
Way Forward: A Future Perspective
A boom in the development of metro rail projects in India is not only helping to ease congestion, but is also generating lucrative business opportunities as the country ploughs funds for bringing its deficient public transport system to speed. With a view to systematically augmenting the metro rail transport in the country, MoHUA has issued ‘Metro Rail Policy, 2017’ in August 2017 (Ministry of Housing and Urban Affairs, 2017). The policy bridges the much-needed gap for ascertaining and enhancing the feasibility of metro rail projects from an economic, social and environmental perspective. The policy aims to focus on systematic planning and implementation of metro rail systems and act as a guide to State governments for preparing comprehensive proposals for metro rail projects. The policy emphasises on progressive indigenising of metro rail systems through incentivising and encouraging indigenous development and manufacturing of the components that are being presently imported. ‘Make in India’ initiative in the metro rail sector is an imperative need of an expanding economy throwing open various opportunities. When implemented effectively, it will turn out to be clear answer for India’s triple issues of growth, employment and manufacturing. We should standardise and indigenise metro technologies according to our needs and thereby contribute to ‘Make in India’. The metro rail operators should create a policy framework to meet
With all the efforts being made, metro rail in India is on its way to becoming a sustainable, affordable and fast means of transport with a growing share of Make in India components/products.
Footnotes
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.