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PLI railway push for local manufacturing of components for Vande Bharat & LHB
Industry News- Jul 03,24
The PLI scheme is for a three-year period, with projected incentives of Rs 10-15 billion.
In a bid to boost the 'Make in India' initiative in the railways, the Centre is set to introduce a production-linked incentive (PLI) scheme aimed at enhancing domestic manufacturing of critical components for the Vande Bharat and Linke Hofmann Busch (LHB) train sets, according to sources familiar with the matter as reported by a source.
Under the proposed scheme, the government plans to offer output-linked incentives to companies producing items such as wheels, brakes, transmission systems, and other parts that are typically imported. The incentives are expected to range between 5% an d 10%, with final details contingent upon the scheme's finalisation.
Anonymous sources cited in the source’s report indicated that the PLI scheme is for a three-year period, with projected incentives of Rs 10-15 billion. The finance ministry will evaluate the proposal to determine the extent of support to be provided to rail component manufacturers.
The initiative aims to stimulate local production, reduce dependence on imports, and potentially attract foreign manufacturers to establish or expand their operations in India's railway rolling stock sector. It is particularly targeted at supporting the manufacture of components for LHB and the Vande Bharat train sets, as well as parts for new-generation trains powered by alternative fuels like hydrogen.
Global leaders in rail systems and rolling stock, including Alstom, Siemens, and Stadler, have a presence in India through manufacturing facilities or joint ventures. A PLI scheme tailored for rail components is anticipated to incentivise these companies to encourage their vendors to set up manufacturing units in India, thereby boosting both local and international operations within the railway sector.
Industry voices, such as Vivek Lohia, MD, Jupiter Wagons Limited, expressed optimism about the PLI scheme's potential impact. Lohia highlighted its role in promoting import substitution, driving export-led growth, and fostering a healthy environment for MSMEs in the sector.
The Indian railway equipment market, valued at approximately $12 billion in 2023, is expected to record a compound annual growth rate (CAGR) exceeding 4% in the coming years. Despite progress in reducing import dependence in certain segments like signalling, over 50% of components for new-age trains are still imported, highlighting the need for initiatives like the PLI scheme to bolster domestic manufacturing capabilities.
Efforts to reduce import reliance have shown success in the signalling sector, where domestic sourcing now meets over 85% of requirement. The forthcoming PLI scheme is part of broader government initiatives across sectors to enhance domestic manufacturing and achieve self-reliance in critical industries.
(Source: Mint & Money Control)
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