The Indian Railways will be revising its ₹31,418 crore plan to buy goods wagons after Modern Industries, one of its suppliers, was unable to fulfill the order due to labour unrest, as per media, quoting unnamed officials.
The wagons, to be used for transporting crucial commodities like coal and iron ore, cost ₹31.94-36.35 lakh per unit depending on the specifications.
Modern Industries was supposed to supply 9,242 wagons to Indian railways for ₹3,776.35 crore in July 2022, according to the report. However, the order size was reduced to 3,151 wagons for ₹1,287.54 crore last month as part of a force majeure clause of the contract.
What is a force majeure clause?
Force majeure is a clause which is included in contracts that removes liability due to unforeseen or unavoidable circumstances which hinder or prevent the party from being able to honour the contract. In this case, it is labour unrest.
Modern Industries has only supplied 71 wagons to the railways so far, the report read.
The government had ordered 79,800 wagons from seven suppliers in July 2022 to supplement the already existing 300,000 wagons of the railways. This has been described as the largest order it has made of this kind.
Orders from other suppliers will be increased to balance out the shortfall, quoting an unnamed railways ministry official.
The Indian Railways transports about 27% of all the country’s goods across its 68,000-km network, according to a report by global logistics giant, Maersk.
Indian Railways transported 1,154,67 million tonnes of goods for the first nine moneths of the financial year 2023-24, according to another report, which added that this was 4.1% more than the 1,109.38 million tonnes reported in the same period of the previous financial year.
The Railways’ earnings from goods transport also climbed 3.84% to ₹1.25 lakh crore in the same time period, according to the report.