Indian Railways shelved private trains and bet on 75 indigenous Vande Bharat sets
After only two bidders turned up for its 150-private-train tender, Indian Railways shelved it and ordered 75 made-in-India Vande Bharat trainsets.
What was changed
Until mid-2021 Indian Railways' flagship plan was private passenger trains: tenders for 150 modern trainsets that were expected to draw more than Rs 30,000 crore of private investment. The indigenous Vande Bharat, whose first prototype the Integral Coach Factory in Chennai built in a record 18 months by end-2018, sat in cold storage after early complaints about ride quality. Only two bidders — government-owned IRCTC and Hyderabad's Megha Engineering and Infrastructures — turned up, and the tender was shelved.
The pivot came in 2021: 75 Vande Bharat trainsets by August 15, 2023, a deadline Prime Minister Narendra Modi set publicly for the 75th year of independence. Production was split across three factories — 24 at ICF and 10 each at Modern Coach Factory Raebareli and Rail Coach Factory Kapurthala — with a prototype due April 2022 and three rakes a month once trials pass.
Officials told The Economic Times why private players balked: they wanted a rail regulator first, an 18-year concession instead of 35, and protection from competing against a state operator that does not raise fares. One company asked for a written guarantee that fares on competing routes would rise — 'a proposal impossible to even consider', an official present said.
Sceptics remained. The first two trainsets' ride problems came from electricals and bogie design, said former Railway Board chairman VK Yadav; vigilance cases against ICF officers who made fast decisions had hit factory morale, warned former ICF general manager Sudhanshu Mani; and Talgo India said abandoning private trains would cost India foreign investment and newer rail technology.
Why it worked
The private-train tender failed on its own terms: two bidders for 150 trains, against an expected Rs 30,000 crore of private investment.
The bidders' conditions — a rail regulator, a shorter concession, fare protection — asked the state to change what its own fare politics would not allow.
Vande Bharat had a record to build on: two trainsets had run more than 1 million km at a 160 kmph service speed by 2021.
At Rs 110-115 crore per set, the railway minister said it costs well below comparable trains in Europe (Rs 150-160 crore) or Japan (Rs 180-190 crore).
What can be applied
When private capital will not come, a proven in-house product can carry the plan — but only if the state keeps funding the technology upgrades after it.
Aftermath
As of the October 2021 report, bids for 58 more trainsets were to be awarded by December 2021, sleeper versions were planned to replace Rajdhani long-distance trains, and exports were targeted for 2026-27. The private-train project stayed nominally alive but, in the paper's words, was slipping into oblivion. Mani warned that on-time delivery required fixing ICF morale; the minister argued the technology upgrade in the first 44 sets would speed up production of the rest.