Japanese engineering and steel companies are in the seat of the driver to bag major supply contracts for a $17 billion Indian bullet train, various sources said, undermining a primary component of Prime Minister Narendra Modi’s Economic policy- a push to “Make In India”. Japan is funding more no. of projects and Japanese companies are likely to supply at least 70% of the core components of the rail line, said sources in New Delhi with direct knowledge of the whole matter. And a spokesman for Prime Minister’s Modi’s office declined any sort of comment. A Japanese transport Ministry Official involved in the project 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.
The September 2017 agreement between India and Japan for the project of Bullet train includes two clauses- the “Make In India’s” promotion and even the promotion of “Transfer of Technology”- through which New Delhi had hoped to set up manufacturing facilities in the country, generate jobs and get a toehold in the technology of Japan. Prime Minister Narendra Modi faces a General Election 2019 and is under pressure to provide more jobs to millions of unemployed in India. Critics also say the bullet train is wasteful and the money could be better used elsewhere. “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”.
Mr.Khare didn’t elaborate but two Indian Railways Official, who spoke on condition of anonymity, said their Japanese counterparts had raised questions about efficiency in Indian Companies and their ability to meet timelines. The World Bank currently ranks India 100th out of 190 nations on the ease of doing business, giving it relatively low marks for starting a business, enforcing contracts and dealing with construction permits.
Tomoyuki Nakano, director for International engineering affairs in the Railway Bureau at Japan’s Transport Ministry, said the issue was that companies of India had no technologies specializing and experience in high-speed railway system at present. 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 20122. 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.