Russia-India Joint Venture Wins US$6.5 Billion Contract To Build Electric Trains

Kinet Railway Solutions, a company formed by Transmashholding, Russia’s largest locomotive and rail equipment manufacturer, and the Indian government-owned Rail Vikas Nigam Limited (RVNL), have announced that they have won a US$6.5 billion Indian government contract to manufacture 120 electric trains for Indian Railways at Kinet’s production facility in Latur, Maharashtra.

The company won the tender after offering the lowest price of ₹1.2 billion rupees (about ₽1.3 billion) per train, seeing off rivals such as German giant Siemens, France’s Alstom Transport, and Switzerland’s Stadler Rail.

Transmashholding project leader Alexandra Meluzova said the venture “makes a significant contribution to the development of the industry and, most importantly, strengthens the friendship between our countries.”

The trains produced by the joint venture will be used for Indian Railways’ Vande Bharat program, which was introduced in 2019 to modernize long-distance routes and increase the efficiency of transportation.

Around 100 Vande Bharat trains are currently being operated in India, connecting more than 280 districts, with the latest three such trains inaugurated by Prime Minister Narendra Modi on August 31. Indian Railways has aimed at procuring 4,500 new Vande Bharat trains by 2047. According to Transmashholding, delivery of the trains produced at the Latur factory is expected to take place between 2026 and 2030, while the first two prototypes will be ready for testing by the end of next year.

The tender, in which a majority Russian-owned MNC had to compete with Western MNCs for a multi-billion dollar tender, illustrates that on the international arena, Russian companies, and especially those with local partners, can still be highly competitive on the global stage despite sanctions.

In late 2023, Kinet also won a tender to manufacture 1,920 railway coaches in India and maintain them for 35 years. These are being manufactured at the Marathwada Rail Coach Factory (MRCF), also in Latur.

The Russian-Indian venture was in the news last year concerning a dispute over the equity stakes of the JV partners. Initially, Metrowagonmash, part of Transmashholding, received a 70% stake while India’s RVNL and a smaller Russian partner, Locomotive Electronic Systems (LES), would gain shares of 25% and 5% respectively. However, RVNL later insisted on a 69% stake to replace Metrowagonmash as the majority shareholder, citing Western sanctions on Russia and claiming it would create a “smoother movement” for the project. The dispute was resolved after talks “at the highest level” between the two governments, leading to Metrowagonmash retaining a majority stake.

India, with a population of 1.4 billion people, relies heavily on rail transportation, with more than 12 million people reportedly traveling on 14,000 trains each day. The Indian government has increased its expenditure on railways by 77% over the past five years, including significant investment in the construction and modernization of lines and rolling stock.