Narendra Modi. Picture: REUTERS
Narendra Modi. Picture: REUTERS

New Delhi — India is set to award its first global rail supplies tender to local firms, shunning major foreign bids, as part of its efforts to develop domestic manufacturing, two sources with direct knowledge of the matter said.

Prime Minister Narendra Modi is under pressure to promote Indian industry to create jobs for millions of people ahead of the country’s next general election in 2019.

State-owned Steel Authority of India (Sail), which had not even submitted a bid, will provide 80% of the 487,000 tonnes of rails sought in the Indian Railways tender, the sources told Reuters. Jindal Steel and Power (JSPL) will supply the remainder, they said.

The global tender, with a clause to award 20% of the volume to a local firm other than Sail, was issued in October 2017 and was meant to end Sail’s monopoly, which has repeatedly struggled to meet railways’ rising demand.

In fact, Indian Railways was forced to issue a tender in the past financial year, as the state-run firm had failed to supply the targeted quantity of rails.

Sail, JSPL and Indian Railways did not immediately respond to e-mails seeking comment. The two companies will be informed about the decision sometime next week, the sources said.

"Everything will be procured from here. The outsiders did not qualify," a government official said on condition of anonymity as the decision is not public yet.

Japanese trader Sumitomo and East Metals, a unit of Russian steel and coal producer Evraz, were among eight bidders competing in the tender.

Late in 2017, Modi’s office had asked all government departments to prioritise the use of local products in state projects, after domestic companies objected to a global tender by the railways ministry.