Mumbai-Ahmedabad bullet train project: Shot in the arm for domestic firms

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The Mumbai-Ahmedabad High Speed Rail project may be facing land acquisition hurdles, but the authorities are gung-ho about its execution as work on the tenders awarded is set to begin this month.

Railway Board CEO and Chairman VK Yadav has said the laying of bridges and tunnels will be handled by Indian contractors, while Japanese firms will handle work related to signalling, telecom, and rolling stock.

With an estimated cost of Rs 1.08 lakh crore, the project is, however, staring at a delay and political differences also could have an adverse effect on the positivity surrounding the project.

In a press meet earlier on December 1, Yadav, however, sounded confident about its progress, stating that land acquisition in Maharashtra, which currently stands at only 22 percent, will reach 80 percent in four months.

Two major contract packages, worth Rs 32,000 crore and covering 325 kilometres of viaduct and five stations in Gujarat have already been awarded.

According to Abhilesh Babel, CEO, Infra Advisory, Feedback Infra, there should not be any concerns regarding the capability of Indian EPC companies.

"If the Railways is looking at giving Rs 60,000 crore worth of contracts to Indian companies, then that is a good addition to their order books. While companies like L&T have sizable infra orderbooks of greater than Rs 2,00,000 crore, the NHSRCL order is sizable, especially so in a recessionary year.  The roads sector is highly competitive and has 20-30 firms competing for limited projects, larger firms tend to gravitate to projects in sectors like MRTS, rail, power, industrial infra, etc, which have better margins.  Given that the project is funded through soft loans from Japan and under tight timelines, the execution risk is also limited. There's also no need to worry about the capability of Indian EPC companies as they have robust experience in tunneling, viaducts, etc," he told Moneycontrol.

The government is looking to rev up infrastructure projects in the country to counter the after-effects of the coronavirus pandemic, and the bullet train project is expected to be the driving force.

According to the National High Speed Rail Corporation, a special purpose vehicle set up to execute the project, the Sabarmati terminal will house a multimodal transport hub with connectivity to railways, metro, and bus transit point.

With the government emphasising on the Atmanirbhar Bharat theme, the domestic infrastructure firms can hope to make a significant contribution in the building of an ambitious project.