India’s congested cities are awarding new rail projects at a record rate, creating a boon for the sector in the coming years.
India currently has about 300 km (186 miles) of operational metro track laid across seven cities in a country with an urban population of 400 million.
In a bid to boost public transport, the Central government last week said it would boost the budget to expand the Delhi metro by almost a third on the previous year, as well as provide more funding for other state authorities.
Analysts at Axis Capital estimate India will award construction of 650 kms of track worth 2 trillion rupees ($30 billion) over the next three to five years. Annual metro rail-related orders in India have totalled about 200 billion rupees in each of the last three years.
Even if some of those projects remain on paper, the potential for manufacturers and engineering firms like Germany’s Siemens, France’s Alstom SA and locals like BEML Ltd and Larsen & Toubro Ltd is too big to ignore.
“The way metro rail boomed in China is about to happen in India,” said Tilak Raj Seth, the head of Siemens India’s transport business, which is supplying signalling and electrification for projects in Delhi and Chennai.
Bombardier India’s unit, part of the Canadian group, has a backlog of 160 metro coaches and forecasts demand for another 3,000 by 2021.
Alstom India Ltd is on course to double the revenue earned from metro projects to 200 million euros ($220 million) this financial year and is targeting 1 billion euros a year by 2021, its managing director said.
“What India completed (in laid tracks) in the last 20 years, I would expect that we will complete that in the next 2-3 years,” said managing director Bharat Salhotra .
He said Alstom would spend 25-30 million euros over the next few years to expand its Indian factories, after winning orders to supply carriages for the cities of Jaipur and Kochi.