Siemens and Alstom recently announced the merger of their rail businesses. TILAK RAJ SETH, executive vice-president of Siemens and chief executive officer of its mobility division in India, talks to Shine Jacob about the merger, the effect of the goods and services tax on the industry and about the company’s plans for India. Edited excerpts:
What is the state of the merger of the rail businesses of Siemens and Alstom?
Closure takes time. We expect it by the end of the next calendar year. It could take anything between 12 and 18 months. Until that time both organisations continue to remain fierce competitors.
Siemens and Alstom are in the fray for the Kanchrapara coach factory in West Bengal. Will the merger announcement affect these plans?
Kanchrapara is an iconic project. The Indian Railways and the successful bidder will co-own this facility. The project will bring to India technology that it does not have. It will usher in a method of manufacturing and project execution that is international and of global standards.
Half of the 5,000 car fleet to be built over 12 years is to be maintained over the next 13 years. It is a multi-billion-dollar project, if you are searching for a number, $5 billion is good. We qualified as group Siemens-Bombardier. CRRC-Alstom and Medha-Stadler also qualified. We are in the request for proposal stage and the submission bid is due in the middle of January.
Regarding the merger, as of today we are two competing companies and will continue to compete.
Regarding the merger, as of today we are two competing companies and will continue to compete.
How do you regard the changes in policies since Piyush Goyal took charge as railway minister?
The new team, Minister Goyal and Chairman Lohani, plus the Railway Board management, not to forget the general managers in various zonal railway production units, are all in a rhythm set by a sense of urgency.
This urgency is covering key areas. One is railway safety. Second is operation at global standards. Third is enhancing throughput and de-bottlenecking the system. Fourth is pace of electrification — in a very short time they will electrify all the tracks.
The minister has said there is no budget constraint for safety. He has said channel managers are free to take any action required to enhance safety. He also mentioned governance required from the Railway Board would be provided in a defined, specified time.
The pace of electrification has increased...
They were earlier talking about 4,000 km electrification per annum, now they are talking about 12,000 km. This is welcome because with this you use more environmental-friendly modes of transport.
What will draw the private sector more to rail projects?
Investment must continue unhindered. Project execution time should be well defined. Terms must be equitable so industry and the Indian Railways share each other’s concerns. A joint working group is looking into this.
Has the GST affected you?
A lot of rail components, like traction converters and signaling equipment, are in the highest GST slab of 28 per cent. Since railway is the most efficient mode of transport, it merits a rational rate of the GST. Further, there is an inverted GST structure in some areas. You have 5 per cent GST on trains, but 28 per cent GST on components. This needs to be corrected.
Apart from Kanchrapara, which other projects are you interested in?
There is a project, now in the qualification phase, for locomotive purchase. We are quoting for locomotive projects, EMU components and locomotive components. We are also quoting for the train protection and warning system.