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Indian Railways: An Opportunity for MSMEs 

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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
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

Total Annual Target to MSMEs ( in Crore)Achievement  ( in Crore)
Target MSEs(20%) ( in Crore)Achievement From MSEs(in Crore)
Target For SC/ST MSEs(4%) (in Crore)Achievement From SC/ST MSEs( in Crore)
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

Total Annual Target ( in Crore)Achievement ( in Crore)
Target For SC/ST MSEs (4%) (in Cr)Achievement From SC/ST MSEs(in Cr)
Target MSEs (20%) ( in Cr)Achievement From MSEs(in Cr)
Source: MSME Sambandh

SMEStreet Guide for MSMEs to Do Business Indian Railways

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.

Motive Power1. Residual life analysis of crankshaft of the locomotive engine
2. Development of Fuel Cell powered locomotive
3. Development of direct drive traction motor
4. Development of hybrid battery powered shunting locomotive
Geo-Tech. Engg.1. Assessment of strength and strengthening of railway formation
2. Construction of new railway formation for heavier axle load
3. Study on stability of cuttings in railway track
4. Application and design of Geo-synthetics and reinforced earth structures in Railway formation
5. Design methodology for thickness of blanket based on type of soil, axel load, speed, GMT, track tolerances, maintenance level etc.
6. Prevention of rock fall in cuttings including its detection by suitable warning system and mitigation techniques for failure of cuttings.
7. Effect of seismic forces on embankment and design of embankment from seismic considerations.
Testing1. Track simulator
2. Test preparedness for testing at 300 kmph
3. Contactless force/stress measurement
4. Measurement of rail-wheel contact force through other than measuring wheel
5. Capability to use Anthropromorphic Test Device (ATD) for secondary collision environment measurement
Traffic1. Increasing throughput by reducing speed differential
2. Running of Heavy Haul trains and required technology for upgradation/modification in the infrastructure
Engine Development1.Reduction of emissions of 16, 12 and 6 cylinder ALCO engines as well as 4000 HP GM EMD-710 G3B diesel engines of Indian Railways as per International standards
2. Upgradation of Horse Power and reduction in break specific fuel consumption of 12 cylinder ALCO 251C engine
3. Upgradation of Horse Power and reduction in break specific fuel consumption of 6 cylinder ALCO 251C engine
4. Reduction in lube to fuel oil ratio of 16 cylinder ALCO 251C engine to 0.5%
5. Development of Electronic fuel injection system for GM EMD-710 G3B diesel engine.
Psycho Technical1. Computer Aided Psychological Testing
2. Human factors in railway accidents
Electrical1. Control systems for propulsion control as well as train control – various standards and protocols used and their applications, distributed intelligence vs. centralized intelligence etc.
2. Drive Systems for high speed drives (more than 3000 rpm) – Study of design and maintenance issues of traction motor, bearing, lubrication etc.
3. Traction converters for high power locomotive application study of various designs, circuit configurations and topologies, selection of power devices, power capacitors, inductors etc. and their ratings.
Power Supply & EMUDevelopment of polution-free Fuel cell for replacing 4.5 kW alternators, RRU and battery in slow moving train to improve illumination and passenger comfort.
Traction & Installation1.Development of Unified Power Quality Controller (UPQC) for improving power factor and reducing harmonic distortion
2.Development of traction transformer condition monitoring system
3.Development of Lightning arrestor condition monitoring system.
4.Development of Intelligent  SCADA system for high density traffic systems having RTUs with independent decision capabilities, integration of protection system, high speed communication and enhanced human-machine interfaces.
5.Laser based OHE Recording cum test car. Development of OHE recording cum test car for measurement of OHE parameters and non-contact measurement of OHE geometry under dynamic condition









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 Askari

Faiz is a mediapreneur specialised in Small Business and Technology domain.

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