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Indian Railways' ₹3,776 crore order for goods wagons unfulfilled due to labour unrest
Modern Industries, a supplier was to provide 9,242 wagons to Indian railways for ₹3,776.35 crore, but the order size was reduced due to labour unrest.
The Indian Railways will be revising its ₹31,418 crore plan to buy goods wagons after Modern Industries, one of its suppliers, was unable to fulfill the order due to labour unrest, the Economic Times wrote, quoting unnamed officials.
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The wagons, to be used for transporting crucial commodities like coal and iron ore, cost ₹31.94-36.35 lakh per unit depending on the specifications.
How many wagons was Modern Industries supposed to supply?
Modern Industries was supposed to supply 9,242 wagons to Indian railways for ₹3,776.35 crore in July 2022, according to the report. However, the order size was reduced to 3,151 wagons for ₹1,287.54 crore last month as part of a force majeure clause of the contract.
What is a force majeure clause?
Force majeure is a clause which is included in contracts that removes liability due to unforeseen or unavoidable circumstances which hinder or prevent the party from being able to honour the contract. In this case, it is labour unrest.
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Modern Industries has only supplied 71 wagons to the railways so far, the report read.
What is the government going to do next?
The government had ordered 79,800 wagons from seven suppliers in July 2022 to supplement the already existing 300,000 wagons of the railways. This has been described as the largest order it has made of this kind.
Orders from other suppliers will be increased to balance out the shortfall, the Economic Times wrote, quoting an unnamed railways ministry official.
How much does India depend on railways for goods transport?
The Indian Railways transports about 27% of all the country's goods across its 68,000-km network, according to a report by global logistics giant, Maersk.
Indian Railways transported 1,154,67 million tonnes of goods for the first nine moneths of the financial year 2023-24, according to another Economic Times report, which added that this was 4.1% more than the 1,109.38 million tonnes reported in the same period of the previous financial year.
The Railways' earnings from goods transport also climbed 3.84% to ₹1.25 lakh crore in the same time period, according to the report.
