"The contract for the entire 60,000 route km will be given in one go and companies will be encouraged to make in India," Railway Minister Piyush Goyal told Hindustan Times newspaper.
The state-owned Indian Railways is one of the world's largest train networks, criss-crossing the country from north to south. It operates some 9,000 passenger trains and carries nearly 23 million passengers every day.
This vast public enterprise runs schools and hospitals, own police force and construction companies, and has 1.3 million people on its payroll, making it the seventh biggest employer in the world.
However, train disasters are common in India as much of the colonial-era rail infrastructure is out of date. A number of people are killed in train accidents, mostly derailments, across the country every year.
In 2015, Indian Prime Minister Narendra Modi's government pledged 137 billion US dollars over five years to modernize and expand the railways.