STN: The production of the 120 Vande Bharat trains, a joint venture between Transmashholding (TMH) and Indian Rail Vikas Nigam Limited (RVNL), has hit several obstacles. The deal is worth approximately $3.63 billion (approx 30,000 crores) aimed at manufacturing Vande Bharat Express train sets. However, the recent sanctions on Russia by several countries have caused significant complications. Many countries serving as suppliers of spare parts have instituted sanctions resulting in severe damage to the consortium’s operations.
Earlier this year, the Indian Railways awarded the TMH-RVNL consortium the JV deal to produce 120 Vande Bharat train sets at a cost of about ₹120 crores each. To ensure the project’s smooth progress, RVNL requested majority shareholding from TMH, which the Russian company did not agree to. This prompted TMH not to provide the required bank guarantee of nearly ₹200 crores to initiate the project.
According to a senior RVNL official, many essential parts need to be imported from manufacturers in Western Europe and America, which has added to the complications caused by the sanctions. On May 22, the United States imposed sanctions on the Metrovagonmash, a division of TMH that manufactures rolling stock and spare parts for the railways.
To ensure confidence among international suppliers and bankers, RVNL has a significant share in the joint venture. But, it is pushing for a majority stake, aiming to resolve the matter by acquiring it. These companies are cautious due to the sanctions imposed on RussiaR as a result of the ongoing Ukraine war and prefer dealing with an Indian company.
The consortium has until June 2025 to prepare the first two prototypes of Vande Bharat trains for testing and trials. If these are approved, production will continue in a tapered manner, manufacturing 12 to 18 trains each year, and the consortium will also provide maintenance services for 35 years.
The Indian Railways has allocated $1.8 billion for the train sets and an additional $2.5 billion for maintenance, with payments disbursed progressively after the delivery of train sets to the railways. Despite the technical capabilities of the Russians, the official emphasized the importance of ensuring comfort in dealing with them. The official expressed confidence that the issue would be resolved within a few days.
Both sides have vowed to keep the negotiations bilateral and confidential, and the Russian Embassy has not yet responded to requests for comments. In conclusion, while the joint venture between TMH and RVNL aims to produce Vande Bharat sets, the recent sanctions have caused significant complications. RVNL has requested majority shareholding from TMH to instill confidence in international suppliers and bankers that prefer dealing with an Indian company. Payments will be disbursed progressively after the delivery of the sets to the railways. Despite the issues, both sides have vowed to keep the negotiations bilateral and confidential.
