Wheelsets: The Risk That Could Derail India’s Rail Boom

By Dev Chandrasekhar

What?

India's railways are a happening sector. The Union Budget 2026-27 has sanctioned seven new high-speed rail corridors at an estimated cost of Rs 16 lakh crore to serve as "growth connectors”. About Rs 28,740 crore has been earmarked for ongoing metro rail and mass rapid transit systems nationwide for FY27, with long-term ambitions to scale to 50. 

All these ambitions are hinged upon the wheelset, a small, unglamorous, but critically important component for railways. Two wheels press-fitted onto a single axle, the wheelset must bear dynamic loads, transmit braking forces, and resist fatigue cracking for hundreds of thousands of kilometres without failure. The engineering demands are severe. The safety margin is zero.

India, it turns out, can barely make one.

Why?

India’s wagon builders have a theoretical capacity of 60,000 units per year. They are producing 35,000–40,000. The constraint is not assembly capacity. The gap is not orders. It is wheels.

A distinction matters here. Indian freight wagons have historically used cast wheels — poured molten steel, economical but limited in performance. SAIL’s Durgapur Steel Plant has an annual capacity of roughly 40,000 cast wheels, but cast wheels address a different performance envelope from the forged product now in demand. SAIL cannot serve the segment that is growing fastest.

Vande Bharat trainsets, LHB coaches, metro cars, and European freight all require forged wheels: pressed and rolled under intense heat for superior fatigue resistance and higher axle-load tolerance. These are different products, of different metallurgy, moved by different supply chains. 

Why It Matters 

The shortage has two further dimensions. First, an aggregate deficit of domestically manufactured forged wheels forces reliance on China and Eastern Europe. Second, a type-wise mismatch: 840mm diameter wheels suit older wagon designs; 1,000mm wheels are required for newer high-axle-load configurations. When Indian Railways (IR) shifts specifications on policy timelines that don’t align with supplier investment timelines, even available inventory can become useless.

The import valve is unreliable. Ukraine was a significant supplier until February 2022. The war ended that supply chain overnight. China filled the gap, but that too is a risk now. A Chinese export restriction on railway wheels, entirely plausible in any sustained trade or military confrontation, would be an operational crisis for a network that cannot run without them.

The strategic logic of domestic wheelset capacity is identical to that for semiconductors. Yet, perhaps because it generates fewer headlines, the Aatmanirbhar Bharat framework has been slow to notice the gap in its own backyard. The performance linked incentives scheme for speciality steel overlooked forged wheel manufacturing entirely.  

The freight wagon shortage is the proximate crisis. The metro expansion is the structural one, building behind it.

$68.6 billion

That’s how much India’s Nifty IT firms lost in market capitalisation in February, marking their worst monthly drop in 23 years. The Nifty IT index has fallen about 21% this month, sharply underperforming the broader Nifty 50, which has stayed roughly flat, and lagging several Asian peers that have posted gains of 2 to 5% in the same period.

The Lead: Analysts say fears over how artificial intelligence technologies might reshape India’s IT services model are driving this selloff. Investors worry that AI tools could automate coding, maintenance, and back-office tasks that traditionally generate billable hours for Indian firms. In fact, companies are already seeing foreign clients delay or scale down projects as they reassess spending amid rapid AI adoption.

This sectoral slump has dragged down the broader market because IT stocks carry significant weight in benchmark indices. Heavy selling by foreign portfolio investors has amplified the pressure, deepening India’s underperformance relative to regional markets.

Flashpoint: Though markets have reacted swiftly, experts say it remains unclear whether the AI revolution will ultimately hurt the industry.

The Core spoke to Noshir Kaka, Senior Partner at McKinsey, on the sidelines of NASSCOM’s annual Technology and Leadership Forum in Mumbai, where industry leaders gathered to discuss AI, global demand trends, and the future of Indian tech services. Kaka argued that AI will likely benefit the sector. He said companies that embrace AI can boost productivity, deliver projects faster, and create new service lines around AI integration, data modernisation, and AI governance. Rather than shrinking the industry, he said, AI could expand the addressable market for Indian IT firms that adapt quickly.

For now, markets are pricing in disruption. But industry leaders believe transformation, not decline, will define the next phase.

The Pioneer presents India Finance & Innovation Forum 2026 convenes policymakers, regulators, financial institutions and industry leaders to examine India’s evolving financial architecture. Over three days, senior decision-makers will explore fiscal and monetary priorities, capital markets, digital finance and innovation-led growth through focused dialogue, networking and collaborative sessions on what’s changing, what works and what comes next.

India Solar Hit

The United States has imposed preliminary countervailing duties of about 126% on solar cells and modules imported from India after concluding that Indian manufacturers benefited from government subsidies that distorted competition. US investigators said policy support, including production incentives and other financial benefits, allowed Indian exporters to sell panels at artificially low prices in the American market.

The Scoop: The duties apply to roughly $4.5 billion worth of imports, and will making Indian modules “at least 30%” more expensive than US made ones, according to Sehul Bhatt, Director at Crisil Intelligence. “The announcement comes at a time when Indian players have planned healthy capacity expansion over the next three years,” Bhatt writes.

Impact: Shares of major Indian solar companies fell as investors weighed the potential hit to export revenues, order pipelines, and future capacity expansion plans.

TCS AI Pivot

Tata Consultancy Services (TCS) is urging employees to use artificial intelligence tools even if it reduces short term revenue, Chief Executive K Krithivasan said at the Nasscom Technology Leadership Forum 2026 in Mumbai, signalling a strategic shift at India’s largest IT exporter.

The Shift: Krithivasan said TCS wants staff to tell clients when AI can deliver work faster, better or cheaper, even if that cannibalises billable hours. “If there is a better way of doing work using AI, we should not hesitate,” he said. “We are not afraid this technology will take away our livelihood. We believe it is going to open up more.”

Future: The remarks come as investors worry that generative AI could disrupt India’s labour-intensive outsourcing model and pressure margins.

India’s Carbon Start

India has launched its first compliance carbon trading programme, marking a major step in its climate policy framework. The government has notified nearly 500 industrial units across energy intensive sectors and assigned them emissions intensity targets. Companies that beat their targets will earn carbon credit certificates that they can trade, while those that fall short must buy credits.

Flashpoint: However, the first phase excludes the power sector and several major polluters, limiting the scheme’s overall coverage. Critics say this weakens the programme’s impact because electricity generation accounts for a large share of India’s emissions.

Backdrop: Officials say they will expand coverage in phases. They argue that a gradual rollout will help industry adapt while building a functioning domestic carbon market aligned with global climate standards.

Car Efficiency Norms Coming Soon

Union Heavy Industries Minister HD Kumaraswamy confirmed on Wednesday that the Power Ministry has submitted India’s new environmental norms for vehicles —
CAFE-III (Corporate Average Fuel Efficiency) norms — proposal to the Prime Minister’s Office. Expected to commence in April 2027, these norms mandate fleet-wide reductions in CO2 emissions and fuel consumption.

Context: The submission follows a contentious feedback period involving the Bureau of Energy Efficiency (BEE) and key auto stakeholders as the industry remains sharply divided over a proposed weight-based concession for small cars.

Maruti Suzuki advocates for leniency, arguing that CAFE standards should primarily target larger, high-emission vehicles. Conversely, Tata Motors and Mahindra oppose any relaxation, warning that prioritising lighter weight over efficiency could compromise safety standards and stall India’s transition toward sustainable, green mobility.

Setting: As the PMO reviews the final contours, the regulation aims to tighten India's fuel efficiency targets from the current CAFE-II levels of 113 g/km of CO2.

The Lithium Boom is Heating Up

Thanks to growing demand, lithium stock prices grew 2X+ from June 2025 to January 2026. $ALB climbed as high as 227%. $LAC hit 151%. $SQM, 159%.

But the real winner may be a stock not listed on public exchanges, EnergyX.

This $1B unicorn’s patented technology can recover 3X more lithium than traditional methods. That’s earned investment from leaders like General Motors.

Now they’re preparing for commercial production just as experts project 5X demand growth by 2040. They’ve announced what could be one of the US’ largest lithium production facilities and have rights to approximately 150,000 lithium-rich acres across North and South America.

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Stocks Are Back In Unsure Territory

On Episode 808 of The Core Report, financial journalist Govindraj Ethiraj talks to Ranjeet Mahtani, Partner at Dhruva Advisors as well as Dr Tapan Sahoo, Executive Officer – Digital Enterprise at Maruti Suzuki.

• Stocks are back in unsure territory

• Indian IT companies are going all out to protect client relationships and stay relevant

• Exporters have one more duty to worry about and this time it as at home

• How Maruti leans on India’s innovation ecosystem to drive technology changes