Spain's CAF plans rail car plant in Rajasthan

Spanish Railways's coach and component maker CAF (or Construcciones Y Auxiliar De Ferrocarriles, SA), a global leader in coaches and consumables, has submitted a proposal to the government on Tuesday to set up a manufacturing plant at Alwar in Rajasthan, according to reliable sources.

The proposal is in line with CAF's recent consistent presence in major rail projects of the country. So much so, the Spanish company had set up an Indian subsidiary, CAF India Pvt Ltd.

Any entry of players such as CAF into railway car manufacturing could potentially hurt home-grown companies such as Texmaco and Titagarh Wagons, said observers. Already, the latter's prospects of increasing orders for wagons from the state-owned Indian Railways are bleak.

A quick look at CAF's recent activities and future ambitions helps explain the rationale for its proposed Rajasthan plant.

CAF's next project is for supply of 84 coaches to the East West Metro project in Kolkata. Prior, CAF had supplied such rakes to the Delhi Airport Metro project.

It had also bid for the planned metro projects in Hyderabad and Jaipur, and for the 2010 railway tender to build a coach plant at Kancharapara in West Bengal. CAG figured among the shortlisted firms such as Bombardier, Alstom, Siemens and Hyundai.

So far, CAF has been importing its rolling stock to cater to the Indian market. Should the Rajasthan plant proposal get going, it would start localisation of Indian orders, officials said.

Project details are under wraps. Typically, a railway coach factory would entail thousands of crores of rupees in investment. For instance, Indian Railways's latest coach factory at Rae Bareli, which opened last year, required Rs 2,700 crore investment. The plant -- it is only India's third since Independence -- has a capacity to make 1,000 cars of different varieties annually.

CAF's rakes for the metro projects, to be built entirely of stainless steel, incorporate some of the latest technologies. So, although the number of metro coaches to be built may be fewer, costs could well be comparable.

CAF is also a technical partner in Reliance Infrastructure-led Delhi Airport Metro Express which is a special purpose vehicle for the 23-km-long airport-city rail link. (Reliance has a 95% stake and CAF 5% in the joint venture that resumed services on Tuesday.)

Globally, CAF has manufacturing plants in the US, Mexico, Brazil, Argentina and Portugal. It has supplied coaches to metro rail services in cities like Rome, Helsinki and Birmingham (UK).