Starting next fiscal year, Indian Railways will conduct reverse e-auctions for all supply tenders above Rs.10 crore, and services and work orders above Rs.50 crore.

Mint has seen a copy of the draft policy that will be unveiled this month.

The policy states this will eliminate human intervention and help bring more transparency.

Even a 10% savings in cost due to improved competition will result in overall annual savings of up to Rs.10,000 crore for the national carrier. It will be applicable to all zonal railways, production units and railway companies like IRCTC (Indian Railway Catering and Tourism Corp.), RITES Ltd, RailTel and others.

A railway ministry official on condition of anonymity said, “The paperless transaction will help to offer more competitive bids and reduce corruption complaints. Besides, it will improve transparency and provide a level-playing field to the industry.”

He added the policy has been almost finalized. New software is being developed and will be launched by Railway minister Piyush Goyal, the official said, adding a review will be done after the first quarter of the next fiscal.

Indian Railways procures goods worth Rs.50,000 crore annually for production and maintenance of rolling stocks and for operation of passengers and goods and services, along with safety-related works.

In addition, track material worth Rs.10,000 crore is procured every year along with works worth Rs.60,000 crore. The reverse auction policy is expected to cover around 70% of railway’s procurements.

Railways director general (stores) A.K. Goel confirmed the move but declined to comment stating the policy was waiting for approval from the Railway board chairman. The Railways has around 76,000 registered vendors who can access the auction by paying a fee of Rs.10,000 as per the draft policy.

Jaijit Bhattacharya of advisory firm KPMG India said reverse auction will help the railways break cartels and reduce procurement costs significantly in a transparent manner.