Indian steel firms can meet railways' needs: government panel

By Neha Dasgupta

NEW DELHI (Reuters) - Indian steel companies can meet the needs of the country's railways and local rail market entrants such as Jindal Steel and Power Ltd should be given a chance, a government panel said in a document seen by Reuters.

Jindal Steel told the committee this month it could supply up to 600,000 tonnes of rails per year to Indian Railways, which recently floated a global tender for 717,000 tonnes of rails.

The committee on domestically manufactured iron and steel products for government projects is headed by the top bureaucrat in the steel ministry, which has said the tender went against government policy to prefer local steel in state projects.

"Prima facie there exists domestic rail making capacity for the tendered quantity of Ministry of Railways," said the minutes of a committee meeting held on Nov. 3, which were seen by Reuters on Monday.

"Reasonable supply quantity may be assured for the new domestic entrant to demonstrate their capability and build up the performance/track record."

State-run Steel Authority of India Ltd (SAIL), currently the main supplier of rails to Indian Railways, has struggled to supply the steel as the world's fourth largest rail network tries to upgrade and expand.

SAIL is expected to deliver only around 950,000 tonnes of rails this financial year, which is two-thirds of the railways' needs, according to the document.

In response, Indian Railways last month opened up the global tender for steel rail worth an estimated 30 billion rupees ($464 million) to private bidders for the first time.

Global steelmakers such as ArcelorMittal and Thyssenkrupp could bid for the tender.

(Reporting by Neha Dasgupta; Writing by Krishna N. Das; Editing by Tommy Wilkes and Mark Potter)