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Friday, September 22, 2023


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WorldAsianeed settlement

need settlement

India and Russia, which are considered to be evergreen friends, are embroiled in a dispute these days over a deal. In fact, the Russian company Transmash Holding i.e. TMH won the bid to manufacture, supply and maintain 120 Vande Bharat Express trains. It was a joint venture in which Indian and Russian companies were to manufacture these trains together. But now a dispute has arisen regarding the share in this joint venture related to the manufacture of trains.

Actually, India wants that the share of the Indian company involved in the joint venture should be more, but the Russian company has objection to it. The fact is that this contract for 35 years was won by the Russian company Metro Wagon Mash together with Indian public sector Rail Vikas Nigam Limited. Metro Wagon Mash is part of Transmash Holding, Russia’s largest transport engineering company.

Metro Wagon Mash has expertise in development design and manufacturing of rolling stock for Railways. As far as the stake is concerned, Metro Wagon Mash has 80 percent stake and Rail Vikas Nigam Limited has 20 percent stake, but now Rail Vikas Nigam Limited wants 69 percent stake. According to this, 26 percent stake will be given to Metro Wagon Mash and 5 percent will be given to the third partner, Locomotive Electronic Systems. In a letter to Metro Wagon Mash dated 25 April 2023, Railway Vikas Nigam Limited said that it has incorporated a wholly owned private company by the name of Kinnet Railway Solutions Limited ie KRSL. The company will act as the SPV i.e. Special Sponsorship Vehicle which will sign the Manufacture Cum Maintenance Agreement (MCMA) with the Ministry of Railways and subsequently implement the project. After receiving this letter, the Trade Representative of the Russian Federation sent a note minutes to the Government of India on 8th May 2023 instructing Railway Vikas Nigam Limited to stick to the original contract.

In fact, both the companies are adamant on their respective claims, but since the matter has gone to both the governments, it should be expected that the business relations will be resolved diplomatically. However, one thing is very clear from the entire development that a solution can be found only on the basis of the original contract. Russia never backs down from its terms and the record of Indian public companies is also good. Therefore the question arises as to what was the need of Railway Vikas Nigam Limited which messed up the decision of fresh sharing. The Government of India needs to take this matter seriously and solve it because Russia is not a seasonal friend of India.

It is also necessary for India to understand that because of Russia’s strong relations with India, anti-Russian countries including America are ready to establish relations with India. The former US President often used to say that Narendra Modi is a very hard bargainer. Both bargaining and business ethics are essential. Credibility and ethics are very valuable in business. At the same time, realizing the sensitivity of the relations between the two countries, the Government of India should take initiative to resolve this dispute, so that the country’s reputation is not affected. (sp)

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