Japanese Firms Could Benefit From India’s Bullet Train

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India’s first bullet train is main part of discussion from 2016 to now and there are many news coming out regarding Bullet Train. Now, A popular Japanese firm, Japanese engineering and steel companies  contracted for a $17 billion on project “Indian Bullet Train” to bag themselves with the major supply of the rail line core component. According to sources from New Delhi, they are dedicated to providing atleast 70% of the components of a railway line.

According to Reuters & TheWire, Japanese engineering and steel companies undermining the focus of Prime Minister Narendra Modi’s Economic policy i.e. “Make In India”.

Although, Spokesman for Prime Minister Modi’s office declined any sort of comment. We got this information from a Japanese transport Ministry Official involved in the project. They said, that 2 different countries were still working out a strategy for the supply of key components, and would unveil a plan for procurements around July. The Officials spoke on the condition of anonymity.

What Does September 2017 Agreement Includes in Bullet Train Projects?

While making agreement in september 2017, India & Japan focused on 2 main cause:

  1. Make-In-India Promotion
  2. Transfer of Technology

After consideration of these 2 main things, New Delhi was expecting a hipe in jobs, transfer of real technologies, setting up the manufacturing hubs in India but that all looking to go in vain. As we all knows, Prime Minister Narendra Modi is already facing issue in providing employment to the unemployed citizens of India. A General Election 2019 is just on his own way and according to critics, Bullet train is a wasteful project and the same money could be used in different-2 ways to make ensure that the whole India is growing simultaneously.

“The Japanese have reservations on certain issues because they have a concern that there is a difference in the systems and culture of Japan from the culture and systems in India”, said Achal Khare, the managing director of National High Speed Rail Corp Ltd [NHSRCL], the agency tasked to execute the bullet train project. He added, “The work culture is very different”.

Although Mr.Khare didn’t respond to the queries but two Indian Railways Official, informed us by putting the condition of anonymity, that Japanese companies were having problem with the efficiency and deadline of Indian companies, hence this step is taken towards the quick initiation for bullet train. their Japanese counterparts had raised questions about efficiency in Indian Companies and their ability to meet timelines.

Tomoyuki Nakano, Director for International engineering affairs in the Railway Bureau at Japan’s Transport Ministry, told that the companies of India don’t have any specialization in high speed trains and that’s the reason they can’t rely on it.  Mr Nakano said, “I don’t think Japanese are concerned about a difference in the work culture”. He and other Japanese officials said efforts were continuing to fulfil the “Make in India” component of the agreement by promoting collaborations between companies from the two countries.

Still, various Indian officials said it was by and huge accepted that Indian Companies wouldn’t have a major part to play in the bullet train project. Japan will get major leeway because the bullet train is largely funded by a 50-year loan provided by its government, said sources. “At this stage to expect Indian companies to have a bigger share in manufacturing appears to be a little tough,” said a senior official at the policy of Government think-tank, NITI Aayog, who is involved in the negotiations. Prime Minister Modi’s flagship ‘Make in India” initiative aims to lift the share of manufacturing in India’s $2 trillion economies to 25% and create 100 million jobs by 2022. However, midway through PM Modi’s five-year term, manufacturing was still at 17% of India’s GDP in the 2016/17 financial year from 15% previously.

 

One Joint Venture

Japan’s Prime Minister Shinzo Abe laid the foundation stone for India’s first bullet train in September last year. It will link Mumbai with Ahmedabad, the largest commercial city in PM Modi’s home state Gujarat. Nippon Steel and Sumitomo Metal Corp, Japan’s biggest steelmaker, and other companies like JFE Holdings Inc, Kawasaki Heavy Industries Ltd, Mitsubishi Heavy Industries Ltd, Toshiba Corp and Hitachi Ltd, are likely to bid for several contracts, said three senior government officials directly involved in the project.

Nippon Steel said it would not comment on specific projects. JFE, Hitachi and Toshiba said they were interested in the project but had not finalised plans, including any possibilities of joint ventures with Indian firms. Mitsubishi Heavy said it had not decided if it wanted to be involved. The sole collaboration aimed at the bullet train project is between Kawasaki Heavy Industries and Bharat Heavy Electricals Ltd, which aims to win carriage orders.

Japanese government officials have asked for more bullet train corridors in India before transferring technology, three senior Indian officials said. But New Delhi is unlikely to announce any new projects until the final cost and commercial feasibility of the Mumbai-Ahmedabad link are clear, the officials said. “It’s like a chicken and egg situation on technology. The Japanese want an economy of scale and business but the Indian view is that India is a big market that once this market is explored the business will automatically be generated,” said Khare from NHSRCL.

 

Missed opportunity

New Delhi has tried to help Indian steel companies grab a slice of the pie. The government last year mediated negotiations between Nippon Steel and Jindal Steel and Power Ltd to set up a joint venture to manufacture rails, but the talks fell through after the Japanese major raised quality concerns, three sources in New Delhi said. State-owned Steel Authority of India, which for decades has been the main supplier of rails to Indian Railways, was also overlooked by Japanese companies due to quality concerns, the sources said.

Nippon Steel declined to comment and while Jindal and SAIL did not reply to e-mails seeking comment. Left with little choice, Indian firms will now largely provide raw materials like cement and supply manpower for the assembly of rails, the sources said. UltraTech Cement Ltd, Larsen & Toubro Ltd, Bharat Heavy Electricals Ltd and Ambuja Cements Ltd are among those in the race for the supply of construction materials and power, the two Indian railways officials said. These companies did not respond to Reuters’ requests for comment.

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