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Govt changes policy to award railway contracts, now PSUs to compete in open market for tenders

“All such work awarded under the existing scheme for which Letter of Award has not been issued or a Memorandum of Understanding signed or no major contractual obligation undertaken in any form, will also stand cancelled with immediate effect," the Ministry of Railways said in its order.

October 28, 2021 / 06:10 PM IST

Going back on its earlier policy that mandated that the Railway Board screen and award work to eligible public sector undertakings (PSUs), the Ministry of Railways in an order said that PSUs, including those owned by Indian Railways, will now have to compete in the open market with their private counterparts.

The order issued on October 26 takes away a level of protection PSUs enjoyed under a policy formed in 2019 by former Railway Minister Piyush Goyal.

“All such work awarded under the existing scheme for which Letter of Award has not been issued or a Memorandum of Understanding signed or no major contractual obligation undertaken in any form, will also stand cancelled with immediate effect," the Ministry of Railways said in its order.

The order is expected to cut down on paybacks and bring in more competition and thus, lower Railways' costs, officials from the Railway Ministry said.