Seek larger share of tech pie as Indian rail infra matures: Wabtec chief

Transit's focus will remain on components, but open to partnerships to scale higher

In February, US-based railway firm Wabtec Corporation completed half of its 10-year journey to supply 1,000 diesel locomotives to the Indian Railways, in what is one of the biggest foreign direct investments in the Indian railway sector. With diesel being seen as a relic of the past, now, Wabtec looks at tapping into India’s aggressive push to introduce modern, fast urban rail transportation across the country through its equipment and technology vertical, Wabtec Transit.

In an interview with Business Standard, Pascal Schweitzer, newly-appointed President of Wabtec Transit, said that the component-maker and technology solutions firm sees India as one of its top markets going forward, especially as the past year has seen unprecedented acceleration and an “inflection point” in railway infrastructure.

“Railways are a great solution for the future of cities and countries. You see a lot of growth of rail in Western Europe, you see a huge growth in India. You also see growth in North America. So we have a big ambition to really be this leading provider of technology solutions,” Schweitzer said, elaborating on which markets can the company capture at the biggest scale.

In 2023, Wabtec Transit India had a revenue of Rs 1900 crore, which it plans to scale up to Rs 2500-2600 in the next three years. According to the managing director Ajay Mani, the current mix of orders consist of 90 per cent works related to Indian Railways and the rest in other urban rail works. The company is in the business of brake systems, couplers, high-reach pantographs, passenger information systems, and event loggers, among other components.

It now aims to rejig this order mix by expanding its presence into every possible metro and urban rapid rail project. “I believe Wabtec Transit will remain the main driver of our tech business in India. But again, we have this very broad portfolio. So we are growing across every segment in terms of digital solutions,” Schweitzer said.

Wabtec will continue to keep its core focus on component manufacturing, through its facilities in Hosur, Baddi, Bahadurgarh, and an upcoming one at Rohtak. However, it remains open to partnerships for mega contracts and possibilities of acquiring businesses to consolidate its position.

Schweitzer, who was formerly the group president of global freight services, also believes that it's too soon to think that it’s curtains drawn for the company’s freight business in India after it finishes the delivery of 1000 locomotives from its Marhowrah facility.

“We have developments around biofuels, alternative diesel, blending hydrogen into a combustion engine, and introducing hybrid battery locomotives. So yes, maybe it's unlikely to sell a traditional diesel locomotive. But, in a decade from now, where will technology be and what applications are there, the future will tell. But I'm quite optimistic about the future of our freight business because we are developing extremely relevant technologies.”

However, the economic and geopolitical climate of today means that there are no smooth sailings for the equipment-maker. Recently, the ministry of railways tightened local manufacturing regulations for certain components of the Vande Bharat trains, as a part of the Centre’s push to enforce the Make in India programme. Schweitzer believes that the firm is prepared for all regulatory changes. “I believe we are very well advanced in terms of localization capabilities. And I'm very confident in our positioning with our robust transfer of technology process.”

Wabtec has typically not been a start-to-finish supplier of finished goods, as it operates through a global channel of vendors, which it has developed over decades. With global supply chains disturbed first through Covid-19, then through the Russia-Ukraine conflict, and now the internal unrest in Russia, it finds itself in a tricky situation.

“Inflation has really been impacting us a lot today. The global supply chain is not yet stable, and I believe that we don't have any more of the kind of visibility that we had before COVID, where the global supply chain was a well-oiled machine where you could really rely on the performance of external vendors.”

Schweitzer added that the company’s global leadership is still trying to figure out how to deal with this “new situation”.

“We need to build a significantly higher inventory. We need to work based on significantly longer lead time. We have had to ramp up our thoughts in terms of management to deal with significant inflationary pressure. So yes, for us and for the future of the industry, it's really important to continue to monitor this and to manage risk very carefully.”