Railway projects: New rules create level playing field

In a recent decision that is likely to boost competitiveness in the sector, the Ministry of Railways has directed that all railway works will be allotted through open tendering. Thus, PSUs will now have to compete with private sector players to secure railway contracts. The Railway Board is trying to eliminate an intermediate layer so that it can get the best possible price for works and create greater transparency in project allocation.

While private players will now be able to secure orders directly (unlike earlier when they were subcontracted by PSUs) and hence increase their order book, PSUs which have executed complex projects in the past will have the opportunity to explore international markets and/or focus more, India Ratings and Research (Ind-Ra) has highlighted in a recent report.

As per the earlier system, the Railway Board used to award projects based on competitive bidding among PSU players that were part of a selected master list.