Till early 1980s Indian Railways was importing about 55% of requirement of wheels and axles. Indigenous capacity was available only at Tata Iron & Steel Company [TISCO] and Durgapur Steel Plant [DSP]. The TISCO plant was technically not capable of meeting the changing requirement of wheels and axles for the new designs of rolling stock and production was discontinued. DSP was only able to partially meet Indian Railways’ needs.
The cost of imports was high with prices rising in the world market. Financing of imports, delays in supplies and limited availability of foreign exchange adversely affected wagon production and rolling stock maintenance. It was in this context that in the early 1970s the Railway Ministry felt the necessity for setting up a new specialized Production Unit for manufacture of rolling stock wheels and axles as import substitute. The ultimate objective was that DSP and the Rail Wheel Factory [RWF, formerly Wheel & Axle Plant] should be able to totally meet Indian Railways requirement for standard wheels and axles so that their import could be stopped.