India-Russia train deal back on track after dispute resolution
Moscow and New Delhi have resolved a dispute over a joint venture worth an estimated $6 billion to build and maintain 120 trains for India’s ambitious Vande Bharat Express rail service, it was reported on Wednesday.
The joint venture to construct semi-high-speed trains involves the government-owned, publicly traded Indian company Rail Vikas Nigam Limited (RVNL) and Metrowagonmash – part of Transmashholding, Russia’s largest rail manufacturer. The project is back on track after contractual issues were ironed out, Indian media have reported.
The venture was formed last year to bid for the Vande Bharat tender, with Metrowagonmash receiving a 70% stake while RVNL and a smaller Russian partner, Locomotive Electronic Systems (LES), would gain shares of 25% and 5% respectively. The bid won the tender after offering the lowest price of 1.2 billion rupees ($14.61 million) per train, seeing off rivals such as Germany’s Siemens, France’s Alstom Transport, and Swiss Stadler Rail.
However, after winning the contract, RVNL insisted on a 69% stake to replace Metrowagonmash as the majority shareholder, citing Western sanctions on Russia and claiming it would create “smoother movement” for the project. It also argued that it would be a “confidence-building measure” as the project would involve importing spare parts for Vande Bharat trains from Europe and the US. The demand led to a breakdown in the agreement after the Russian enterprise opposed the move.
The dispute has now reportedly been resolved “at the highest level” between the two governments, leading to Metrowagonmash retaining a majority stake. On Tuesday, RVNL informed the financial markets that a purchase deal had been signed between its wholly-owned subsidiary Kinet Railway Solutions Limited and Russia’s Metrowagonmash and LES.
The Vande Bharat Express is a short-distance train service operated by Indian Railways since 2019 across 25 routes. The first of over a dozen semi-high-speed trains currently running in India was developed at Chennai’s Integral Coach Factory. The new trains for the service will be built locally under the government’s ‘Make in India’ initiative. Indian Railways has allocated $1.8 billion for manufacturing of the trains and another $2.5 billion for their maintenance.
The first Vande Bharat prototype train must meet a June 2025 deadline for testing and trials, pending approval. Once given the green light, between 12 and 18 trains will be manufactured annually at the Marathwada Rail Coach Factory in Latur, Maharashtra, and maintenance will be provided by the consortium for the next 35 years.
