New Vendors Shut Out: RDSO Ignores Railway Board’s Directives, Cartel Allegations Surface
RDSO not only wilfully ignored the Board’s directives, but also has “virtually sealed the entry gate” for new suppliers
“The reluctance ensures that no fresh suppliers enter the field, leaving the market open only for a handful of entrenched players who function like a cartel”
The Research Designs and Standards Organisation (#RDSO), the apex body for technical approvals in #IndianRailways, is under sharp scrutiny for allegedly stonewalling the entry of new #vendors despite repeated directives from the #RailwayBoard over the past three and a half years.
The issue traces back to the recommendations of a High-Level Additional Member’s Committee, on the basis of which the Railway Board, vide letter No. 2021/RS(G)/779/7 dated 18.01.20222 directed RDSO to place developmental orders on new vendors so that fresh sources of supply could be developed.
Developmental orders are critical as they allow vendors, after capability and capacity assessment, to manufacture prototype samples for further testing — a step that eventually grants them Developmental status, and thereby, making them eligible for up to 20% order quantities in #tenders floated by Zonal Railways (ZR) and Production Units (PUs). After execution of such orders of specified quantity and performance, they can further progress in the ladder and qualify as full- fledged regular source eligible for bulk orders.
Yet, despite the directive, RDSO has not placed a single developmental order since then.
Board Moves to Rein in Zonal Railways
Subsequently, noticing what it described as “clear reluctance” on the part of RDSO, the Railway Board issued another letter — No. 2021/RS(G)/779/7 dated 01.04.2025 — laying down comprehensive guidelines for placement of developmental orders by RDSO.
In a parallel move, the Railway Board, vide letter No. 2021/RS(G)/779 dated 09.05.2025, clarified that RDSO alone was empowered to place developmental orders, reaffirming its earlier directions issued on 18.01.2022. Concurrently, Board also instructed all Zonal Railways not to place any developmental orders on conditional developmental vendors.
The Board however, sources confirm that RDSO willfully ignored the Board’s directives, failing to issue any developmental order — not just in the three years since the initial mandate, but even in the five months following the April 2025 guideline.
Vendors Left Stranded
The fallout has been severe for new entrants. Several vendors had already cleared the first four stages of the approval process:
- Document scrutiny
- Capability-cum-Capacity Assessment (CCA)
- Design/drawing approval
- Enlistment as conditional developmental sources
What remained was only the placement of developmental orders to enable them to manufacture prototype samples. Without this step, vendors are barred from progressing to the status of confirmed developmental sources, leaving them permanently excluded from procurement opportunities.
Industry insiders allege that by not acting on Board’s directives, RDSO has “virtually sealed the entry gate” for new suppliers. Meanwhile, the Zonal Railways — restrained by the blanket ban imposed by the Board on procurement from conditional developmental vendors — have also ceased issuing any such orders.
Allegations of Cartelisation
Critics argue that the sustained inaction reflects not administrative delay but a deeper strategy. Senior officials of RDSO, they allege, are acting in #nexus with existing approved vendors to maintain a closed supply ecosystem. “The reluctance ensures that no fresh suppliers enter the field, leaving the market open only for a handful of entrenched players who function like a cartel,” an industry observer remarked.
With #competition stifled and prospective vendors rendered helpless despite proven #capability, the #controversy has triggered widespread concern about #transparency and #accountability in the #vendor-approval process of Indian Railways.