Policy Corruption: Is the Railway Board’s New Policy Crushing Indian MSMEs?
The government claims to support “Make in India” and “Atmanirbhar Bharat”, yet such policies are pushing local industries to the brink of collapse
The Dilemma of ERC Manufacturers
#IndianRailways has always been the backbone of the country’s infrastructure & economy, and its policies significantly impact the industries that support it. However, recent directives by the #RailwayBoard regarding the inspection process for Elastic Rail Clips (#ERC) have left many Micro Small & Medium Enterprises (#MSME) manufacturers struggling for survival. The changes, introduced through a series of letters, appear to contradict each other, leaving #vendors in a state of #confusion, #financial distress, and #operational paralysis.
A Flip-Flop in Policy
In March 18, 2024, the Railway Board issued #Policy No. 2022/RS(G)/779/8, introducing the Third-Party Inspection (#TPI) system for both raw materials and finished ERCs. This seemed like a structured approach to maintaining quality. However, just months later, on January 6, 2025, another letter {no. 2024/RS(G)/779/12/(E3482675)} brought a drastic shift—Process Inspection by #RITES was mandated for ERCs, and TPI was excluded from its scope.
If that wasn’t confusing enough, the same letter (Clause 5) mentioned that railway units “may explore implementation of Process Inspection in existing #contracts as far as possible.” This implies that the Railway Board was aware that enforcing Process Inspection in ongoing contracts was neither legal, feasible, nor practical, given its financial implications.
But just three weeks later, on January 27, 2025, (letter no. 2024/RS(G)/779/12/(E3482675)) the Railway Board superseded its own letter, making Process Inspection compulsory for all contracts—including existing ones! How can policies change so drastically in a matter of days?
The Impact on MSMEs: Unfair & Unjust
Every #MSME supplier signs a contract based on #Tender conditions, Letter of Acceptance (#LOA), and Purchase Order (#PO), which clearly define specifications, testing procedures, and production requirements. The new directives have suddenly:
- Changed inspection & testing procedures
- Restricted vendors from producing ERCs freely as per their capacity
- Imposed conditions that were never part of the original contracts
All of this has massive financial implications. MSMEs that planned their #investments, #procurement, and #workforce based on previous contracts now face unexpected costs and compliance burdens. How can small vendors bear such arbitrary changes?
The Harshest Blow: Forced Rejections & Penalties
If this policy change wasn’t already damaging enough, the Railway Board issued yet another letter on February 10, 2025 (no. 2022/TK-II/22/7/3), directing #ZonalRailways and #consignees to reject supplies from vendors and impose penalties.
Imagine being a vendor who has already manufactured ERCs based on earlier specifications, only to be told months later that your entire stock is now unacceptable. Is this fair? Is this how a #government organization should treat its approved #suppliers?
Quality or Inspector Raj?
Indian MSMEs are not against quality control. In fact, they have worked closely with the #RailwayBoard and #RDSO for years to improve product standards. However, the approach taken in the name of “quality” now seems more like harassment.
- Vendors have approached the Railway Board and RDSO to revise the specifications in a practical manner, but their concerns are being ignored.
- Instead of collaborative improvement, an inspector raj is being imposed, making life difficult for Indian manufacturers.
- This shift seems to favour a handful of large corporations and foreign manufacturers, pushing Indian MSMEs out of business.
Who is Responsible?
The key officials accountable for this crisis include:
- CEO & CRB (Chairman & CEO, Railway Board)
- Member (Infrastructure), Railway Board
- AM/CE (Additional Member, Civil Engineering)
- PED/M&Mc (Principal Executive Director, Manufacturing & Mechanical)
- Director Track/MOD, Railway Board
- PED/Infra/RDSO (Principal Executive Director, Infrastructure, RDSO)
- ED/TK-II/RDSO (Executive Director, Track-II, RDSO)
These decision-makers must answer some critical questions:
- Why were the policies changed so frequently within weeks/months?
- Why are MSMEs being penalized for contracts they signed in good faith?
- How can existing contracts be altered forcefully bypassing rules and without vendor consent?
- Why is the Railway Board not engaging with vendors to improve specifications instead of imposing unrealistic demands?
- Is this a deliberate attempt to wipe out Indian MSMEs in favour of corporate giants?
A Call for Immediate Action
The Railway Board and RDSO must immediately reassess their approach. If #quality is the concern, the solution lies in collaboration, not coercion. The government claims to support “Make in India” and “Atmanirbhar Bharat”, yet such policies are pushing local industries to the brink of collapse.
If these issues are not addressed, the consequences will be severe:
- Job losses in the MSME sector
- Disruptions in ERC supply, affecting railway operations
- Legal battles between vendors and the government
- Loss of trust in railway procurement policies
Will the Hon’ble Minister for Railways and Railway Board listen to the voices of Indian MSMEs, or will it continue to push them into financial ruin? The answer will determine the future of countless small enterprises that have long supported the Indian Railways.