Ircon wins US$91.3m railway contract in Sri Lanka

Ircon International Ltd, an Indian Government-run transport infrastructure firm, has won an international railway contract worth around US$91.3 million from Sri Lanka Railways

May 2, 2019

The project is being financed by the Export–Import Bank of India (Exim Bank) as per Indian credit lines

Till date, the Indian Government has provided loans worth US$996 million to develop Sri Lanka's railways

Railways has been a leading avenue for the Government of India to offer assistance to its global partners

India has committed around US$25 billion in soft loans for rail and infrastructure projects to over 60 countries

Ircon International Ltd, an Indian Government-run transport infrastructure firm, has won an international railway contract worth around US$91.3 million from Sri Lanka Railways. The deal involves upgradation of Sri Lanka’s Northern Railway line from Maho to Omanthai. IRCON will upgrade a single line broad gauge track from Maho to Omanthai, spanning around 128 km, apart from associated infrastructure works. This project is being financed by the Export–Import Bank of India (Exim Bank) as per Indian credit lines. India has so far committed around US$25 billion in soft loans for rail and other infrastructure projects to over 60 countries in the past 14 years.

Ircon said that the project would enable the rail track to make it capable of carrying trains at speeds of 120 kmph and with heavier loads. Meanwhile, the related infrastructure work will ensure efficient, safe, and comfortable transport service for passengers and freight. IRCON has so far completed five high-value rail projects in Northern Sri Lanka with a cumulative contract value of over US$645 million. From 1980s, Indian Railways, through Ircon has worked on turnkey railway projects overseas, hoping to tap into the growing market of rail construction in developing countries. The first opportunities for Indian railways had come from Iraq and Algeria.

Railways has been a leading avenue for Government of India to offer assistance to its strategic partners worldwide. For decades now, Indian Railways, the world’s fourth largest rail operator, has been engaged in providing financial aid and technical assistance, apart from constructing rail infrastructure worldwide. Much of this work has been routed through the Exim Bank. This assistance has primarily focussed on developing countries of Africa, Southeast Asia and West Asia. While such projects have aided human development globally, they have also provided lucrative business opportunities for Indian construction and infrastructure companies.

Till date, the Indian Government has provided loans worth US$996 million to develop Sri Lanka’s railway service. In July 2016, the Cabinet had approved a US$318 million credit line via Exim Bank to Sri Lanka for upgrading two railway lines in the country’s north. Ircon has completed more than 100 projects related to new railway lines, bridges, and rehabilitation of tracks in 21 nations such as Iraq, Sri Lanka, Malaysia, Bangladesh, Algeria, Mozambique, Brazil, UK and Ethiopia. Meanwhile, RITES Ltd, another entity of the Indian railways, operates in 55 countries, exporting locomotives, coaches, wagons, DMU train sets and other related equipment.