PSUs to now compete in open market for railway works

Public sector companies, including those owned by Indian Railways, will now have to compete in the open market with their private counterparts to bag railway contracts, the Railway Ministry said.

The Ministry also withdrew its 2019 policy issued by previous Railway Minister Piyush Goyal which mandated that the Railway Board would first screen and award the work to eligible Public sector undertakings (PSUs). The winning PSU would then float the tender in the open market for the actual works. This policy had been in place to ensure railways gets price advantage through competitive bidding among PSUs.

Railway Minister Ashwini Vaishnaw on Tuesday decided to reverse this policy to cut down on paybacks and bring in more competition and thus, lower Railways' cost.

The latest order does away with the policy of protectionism that PSUs enjoyed. In the future, instead of the board deciding which PSU should get the job, the zonal railways will float tenders directly in the market in which the PSUs can also participate.

“All such work awarded under the existing scheme for which Letter of Award has not been issued or a Memorandum of Understanding signed or no major contractual obligation undertaken in any form, will also stand cancelled with immediate effect," said the order issued by railways on Tuesday.

The Railways' capital expenditure has crossed Rs 2.15 lakh crore in a year as the NDA government is aggressively pushing massive infrastructure development.

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