The mega projects, approved since 2007 by the then Indian Railway Minister Lalu Prasad, got mired in controversies, years of red tape and indecision by successive ministers, finally saw the light of the day.
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GE plans to establish a joint venture with Indian Railways before breaking ground on the manufacturing facility.
The agreement entails the manufacture of 1,000 locomotives over a period of 10 years with the basic cost of the 1,000 locomotives pegged at Rs.14,656 crore.
GE said it will invest United States dollars 200 million to develop and supply Indian Railways with 1,000 diesel locomotives. The award is the largest in GE’s 100-year history in the country, Miller said.
The deal coincides with one between Boeing (NYSE:BA) and Tata Advanced Systems, also announced Monday, to manufacture bodies for the AH-64 Apache helicopter at a factory in India and seek other commercial and defense manufacturing work. Similarly, the Madhepura electric locomotive factory project is also finalised and French locomotive maker Alstom is to bag the deal.
Railways will have 26 per cent equity while the global players will have 74 per cent equity in each of the plants.
Running costs from ferrying about 23 million passengers – equivalent to Australia’s population – and 3 million tons of cargo daily absorb most of the railway’s revenues, starving the network of investment. After winning the long-awaited order following competitive bidding, the company said it would build a diesel locomotive manufacturing facility in Marhowra, Bihar, as well as maintenance sheds in Bhatinda in Punjab and Gandhidham in Gujarat.
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Railway reform has been among the top priorities of Prime Minister Narendra Modi, who has opened the sector to foreign investment as part of his “Make In India” campaign.
