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Public procurement - nomination vs competitive award
What it is
Indian Railways awards work either by nominating a public sector undertaking such as RVNL, IRCON or RITES, or by competitive tender open to private contractors
Nomination is faster and avoids tendering delay; competitive award is meant to secure better pricing
Impact on industries
- For nominated PSUs it delivers assured order flow without bidding cost or price competition, underwriting capacity and visibility
- It closes a large share of the railway pipeline to private contractors, so headline capex overstates the addressable market for them
- Nominated work is priced administratively rather than competitively, so margins are thin even without a bidding war
- Policy has shifted between the two over time, so the mix is a live variable that determines who captures the railway capex cycle