The delay in the Indo-Russian joint venture between Kinet Railway Systems and the Railways has resulted in an estimated ₹76 crore loss to Rail Vikas Nigam Ltd (RVNL), the Railway CPSE executing the project. The setback stems from delays in finalizing designs, which are now anticipated only in the first half of 2026, with manufacturing to commence later.
Kinet Railway Solutions, a collaboration between RVNL and Transmashholding (TMH), was established to manufacture and maintain electric passenger trains, including Vande Bharat trains. TMH, Russia’s leading manufacturer of locomotives and rail equipment, ranks among the top five global manufacturers of new rolling stock.
Originally, the joint venture aimed to produce 120 trainsets, each consisting of 16 coaches, with the first prototypes expected by 2025. The project also included a 35-year maintenance contract, valued at $6.5 billion. Each trainset was to be manufactured at a cost of ₹120 crore, accounting for a price variation between 2-4 percent.
However, in mid-2024, the Railways requested a design modification, leading to a reworked contract for 80 trainsets with 24 coaches each. This change retained the initial total of 1,920 coaches. Disagreements over the inclusion of toilets and a pantry car have been cited as potential causes for the delay.
Between July and December, the Railways did not approve the new design, leading to a nearly ₹76 crore notional loss for RVNL as the project stalled. This issue was confirmed by RVNL’s top management during a recent investor call.
Pradeep Gaur, CMD of RVNL, acknowledged the situation, stating, “….in this one we are showing minus ₹76 crore under Kinet. This is our joint venture for manufacturing. Here, the revenue stream is going to start maybe after a year or so. So, this is a notional negative because manufacturing is still to start, and we have invested a lot of money.”
RVNL’s auditors, Gandhi Minocha & Co, highlighted the group’s financial results in their review report, noting the inclusion of the Group’s share of net profit and total comprehensive income in the consolidated unaudited financial results.
Despite the setbacks, RVNL officials indicated that the Railways have reverted to the original design of 16-coach trains. This decision has delayed the initiative by approximately 8 to 9 months, pushing the expected prototype completion from September-October 2025 to the first half of the following year.
Kinet sources have yet to receive formal notification from the Railways, and the company has not responded to queries. Meanwhile, neither the Railway Ministry nor the Minister’s office has addressed inquiries from businessline regarding the project’s status.