China's CRRC's Sri City mfg unit in limbo, may hit Bengaluru metro plans

Company's inability to comply with Make-in-India rules may have a bearing on its role in Indian metro rail sector; firm also risks invocation of Rs 370 cr bank guarantee

The role of Chinese government-owned CRRC Corporation Ltd (CRRC) in the Indian metro rail sector is on shaky ground after the company's inability to comply with Make-in-India guidelines.

CRRC's failure to kick off the production of rolling stock at Sri City manufacturing unit, located around 50 km north of Chennai on the Andhra Pradesh border, is all set to affect the operations of the phase 2 projects of the Bangalore Metro Rail Corporation Ltd. On the ground at Sri City, the company is yet to start work and is yet to get even clearance from the forest department, say sources.

CRRC had won orders to supply 216 metro coaches at a cost of Rs 1,578 crore to Namma Metro in 2016. The failure to meet the commitment is likely to lead to the encashment of bank guarantees to the tune of around Rs 370 crore. Bengaluru metro authorities are likely to take a final call in this regard by the end of this week. CRRC did not respond to questions from Business Standard.

The plant, which planned in 45.3 acre in the Domestic Tariff Zone (DTZ) at Sri City was also expected to see an investment of around Rs 350 crore in its first phase and had plans to manufacture rolling stock (coaches) for key projects like Bengaluru Metro Rail Corporation (BMRCL), Delhi Metro Rail Corporation (DMRC), Mumbai Metropolitan Region Development Authority (MMRDA), and Chennai Metro Rail Corporation CMRCL). The BMRC contract required 75 per cent local manufacturing and over 50 per cent local content.

"The test shop area of the manufacturing unit is yet to be acquired and even forest clearances are pending. In addition to this, the Industrial Area Local Authority (IALA) approval is also required. Construction works remain suspended since July 2021 and the overall project is running 12 months behind schedule," said a source aware of the development. A CRRC official, whom Business Standard spoke to, refused to comment on this.  CRRC India, a subsidiary of the Chinese rolling stock and components conglomerate Nanjing Puzhen, had conducted a groundbreaking ceremony for the Sri City unit in March 2021.

CRRC was formed in 2015 with the merger of rolling stock manufacturers CNR Corporation (CNR) and CSR Corporation (CSR). CRRC Nanjing Puzhen Co is the world’s largest supplier of rail transit equipment with annual revenue of around $ 37.8 billion

An industry source said that other major orders that the Chinese major has so far won in India include Rs 604 crore for supplying 64 cars in Mumbai line 1, Rs 732 crore for 76 cars in Noida, Rs 633 crore for 69 cars in Nagpur. The Bengaluru order was for use in the 73.95 kilo meter stretch on Purple Line, Green Line and Yellow Line, according to the media reports.