Indian Railways: An Opportunity for MSMEs 

SMEStreet Guide for MSMEs to Do Business with Indian Railways, An Opportunity through New Procurement Policy 

Infographic of SMEStreet Guide for MSMEs - Doing Business with Indian Railways

Indian Railways is one of the biggest and most sought after national-level organization, among MSMEs, to work with. But to get to Railways and do business, MSMEs need a lot of understanding about the Railways to procurement, vendor registration process, and most important preparation and planning. MSMEs who wish to do business with Railways can get some valuable insights from this SMEStreet Guide to do Business with Indian Railways.

Indian Railways procurement process is systematic and has qualification driven model but it needs to be understood by MSMEs well before getting into there. Now, the Government of India has launched a new procurement policy which makes it mandatory for government organizations and PSUs to procure a certain percentage of their entire outsourcing work from Indian MSMEs. The policy is designed only to promote the MSMEs. This policy also aimed to enable MSME oriented ecosystem.

Now, as per the policy, there are certain specific targets kept for each ministry to chase. These targets are quantifiable numbers given to respective ministries which they have to spend with Indian MSMEs.

In this guide book article for MSMEs to do business with the Railways it is explained how lucrative is for MSMEs to explore the potential of doing business with Railways.

Before we begin, here are some recent statistics.

As mentioned above, the New Procurement Policy has kept well-defined targets for Indian Railways to do business with MSMEs.

Annual Target from New Procurement Policy Given to Indian Railways for FY 2018-19

Source: MSME Sambandh

The above data in itself shows a substantial amount of gap between the set targets and what has been achieved. The previous financial year ended with underachieved targets.

Now this year, here are the targets and numbers achieved so far.

Annual Target Given to Indian Railways for FY 2019-20

Source: MSME Sambandh

Now, by looking at this potential-rich business opportunity for MSMEs with Indian Railways, MSMEs should understand the system of Indian Railways in order to convert this opportunity into business. Here is the broad level breakup or categories of vendors (which are mainly MSMEs) within Indian Railways. This is a terminology which is getting used at the Indian Railways.

• Mechanical Vendors

This broadly covers companies or vendors that work in the areas of carriage, wagon, locomotive & M&C items.

• Electrical Vendors

Electrical Items: Power Supply, EMU, Traction Installation, QA, Energy Management

• Civil Vendor

  QA(Civil), Track Design, Bridge & Structure items

• S&T Vendor

Companies that are working in the product categories related to Signal & Telecommunication items

Any MSME which operates in a similar space can surely explore possibilities of doing business with Railways.

Key Priorities of Indian Railways for 2020

Here is a brief outline or key objectives of innovation decided by the Indian Railways. This list also shows the most relevant opportunities for any MSME who wish to do business with the Indian railways in FY 2020.  The list explains the targeted priorities of Indian Railways where any MSME who wish to do business with.

Source: RDSO, Indian Railways

Total MSME Vendors listed with Indian Railways are 1566 with 641 different items or products. However, out of this, figure MSME Vendors are 54% SME vendors.

Here is the demographic breakup of SME vendors within Railways

The Roadmap Ahead for MSMEs

While going through this brief report, it can be very well understood that there is a huge opportunity to work for MSMEs. Government of India under the Ministry of MSME have introduced the New Procurement Policy, this is a landmark policy in the interest of vast Indian MSME base. This policy must be explored, understood and pursued. Also, simultaneously, MSMEs must continuously think of striving fir becoming competitive and better. This could be another journey for the entrepreneur and this is where a lot of opportunities can be converted into business.

About SMEStreet Guides

SMEStreet Guide Series of MSMEs is an initiative in the direction of knowledge sharing for MSMEs that can add value to the business growth. Through this initiative, we will bring you closer to opportunities that can be leveraged and converted into business.

For more write to Faiz Askari, founder of SMEStreet at Faiz@SMEStreet.in