GE strikes $2.6-bn locomotive deal with Indian Railways

American multinational conglomerate General Electric Co (GE) struck a deal worth approximately $2.6 billion to supply and maintain locomotives for Indian Railways, one of the world's largest rail operators, marking GE's biggest ever deal in its 100-year history in the country.

The letter of award issued by the railway ministry indicates a time frame of over 11 years, and includes $200 million investment to locally develop and supply Indian Railways with 1,000 diesel locomotives.

GE will sign a formal agreement and establish a joint venture with Indian Railways shortly. The US company is expected to own 74-per cent stake in the JV while the rest will be held by Indian Railways.

The deal advances prime minister Narendra Modi's 'Make in India' campaign and reinforces India's position as a global manufacturing hub.

GE chairman and CEO Jeff Immelt, said, ''This infrastructure project is further evidence of India's position as a growth engine for Asia. It is a major advancement and milestone for India and for GE, and a symbol of our commitment and support of the 'Make in India' initiative.''

The new diesel locomotive manufacturing facility will be located in Marhowra district in Bihar. Maintenance plants will be set up in Bhatinda in Punjab and Gandhidham in Gujarat.

The first locomotives, which will be designed to haul freight, are expected to roll out in 2017.

This effort is a major boost to India's railway modernisation efforts, and will provide skill development opportunities for local talent, GE said.

''This project combines GE's deep infrastructure and manufacturing expertise with India's growth priorities. This is an exciting and integral part of our localisation strategy in India,'' said Jamie Miller, GE transportation chief executive officer.

Acknowledging the significance of the deal for GE, Miller said his company would continue to invest in the region.

Through its liberal policies, the Indian government has been striving to attract more foreign investment in to the country to spur economic growth.

Last year, it allowed 100-per cent foreign direct investment (FDI) in railways in its efforts to expand and modernise the country's vast rail network (See:Cabinet okays 100% FDI in railway infrastructure, 49% in defence production).

New York-based GE is a diversified conglomerate with a turnover of over $148 billion and 305,000 employees. The company has leading positions in several sectors including appliances, power and water, oil and gas, aviation, healthcare, transportation, financial services, engineering among others.

The conglomerate, which is undergoing a massive restructuring and is realigning its manufacturing base, reported a 30 per cent dive in net income in the third quarter at $2.51 billion, down from $3.54 billion last year.

Revenue for the period fell 1 per cent to $31.68 billion.

However, it claimed a backlog of $19.9 billion, up 8 per cent over the previous period.

GE, which started its Indian operations in 1902, has presence in diversified sectors including energy, healthcare, infrastructure, aviation and financial services and employs over 13,000 people.