Why GE won a $2.6B locomotive deal with India’s railway company

Wed, 2015-11-18 06:00 -- SCC Staff

Council Lead Partner GE won the prize in competitive bidding to supply Indian Railways with the locomotives, construction and maintenance facilities it needs to upgrade its system. GE plans to invest $200 million in the project, and anticipates a return of $2.6 billion over the duration of the 11-year contract.

India’s rail system is the fourth largest in the world and is the primary mode of long-distance transportation in the country’s central region. The GE-Indian Railways partnership is expected to contribute substantially to the country’s railroad upgrade program and support its “Make In India” initiative as well as its efforts to establish a position as a global manufacturing center.

The contract is a major win for GE, the largest deal the company has had in its 100 years of operation in India. “The 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,” said GE CEO and Chairman Jeff Immelt.

GE will build its locomotive manufacturing plant in the state of Bihar’s Marhowra District, and maintenance facilities will be located in Bhatinda in Punjab and Gandhidham in Gujarat. The company plans to offer training and employment opportunities for local residents.

The Indian government last year opened the door to 100% foreign direct investment in its state-owned rail system. The GE locomotive contract is one of the first large-scale projects under that program.

GE has numerous partnerships with Indian companies, and Immelt said earlier this year the company is committed to making further investments in the country’s energy infrastructure and health care.

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