GE and Alstom secure total of $5.6bn in Indian train contracts

Posted on 13 Nov 2015 by Aiden Burgess

General Electric (GE) has announced that it will invest $200m to build new plants and warehouses to support the development of its interests in the Indian rail market.

The US industrial company’s planned expenditure is the result of GE and French engineering firm Alstom receiving contracts worth a combined $5.6bn (£3.68) to modernise Indian Railways.

The contracts are the largest to be given to foreign companies since last year when India allowed 100% Foreign Direct Investment in the railway sector.

GE has said it will supply India with 1,000 new diesel trains over the next 11 years, as part of the $2.6b locomotive supply and maintenance contract it received from the Ministry of Railways.

GE was awarded the railway contract after receiving a Letter of Award from the Ministry of Railways, which confirmed the company as the selected bidder for the project.

GE will build a diesel locomotive manufacturing facility in Marhowra district in the Indian state of Bihar, as well as maintenance sheds at Bhatinda in Punjab and Gandhidham in Gujarat.

The $2.6bn (£1.71bn) contract is the largest deal reached in GE’s 113-year operating history in India, and is a major boost towards the modernisation of the country’s railway system.

The Indian Government plans to spend $137bn (£90bn) over the next five years to modernize the system, and to improve the country’s railways which are currently old and overcrowded.

The GE deal will help to advance Prime Minister Narendra Modi’s ‘Make in India’ initiative, with the railway modernization program aiming to attract foreign investment and boost India’s manufacturing industry.

The deal is also an example that reinforces India’s position as a global manufacturing destination, according to GE Chairman and CEO Jeff Immelt.

“This infrastructure project is further evidence of India’s position as a growth engine for Asia,” he said.

“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.”

GE Transportation Chief Executive Officer Jamie Miller also shared his CEO’s enthusiasm for the project’s potential.

“This project combines GE’s deep infrastructure and manufacturing expertise with India’s growth priorities,” he said.

“This is an exciting and integral part of our localization strategy in India, and we are excited about working with Indian Railways and continuing to invest in the region.”

Alstom awarded $3bn contract

Along with GE’s presence, Alstom will also help to make a modernized railway system become a reality for India.

The French engineering firm also received a Letter of Award from the Ministry of Railways, with the company winning a $3bn (£1.97bn) contract to supply Indian Railways with 800 double section freight electric locomotives as well as their long-term maintenance.

The project also includes the establishment of a plant at Madhepura (Bihar state) and two maintenance depots at Saharanpur (Uttar Pradesh state) and Nagpur (Maharashtra state).

The delivery of the 800 locomotives will be spread over a ten year period between 2018 and 2028.

Much like the GE deal, the Alstom project to help modernize India’s railways will be pivotal in boosting India’s infrastructure development.

Alstom Executive Vice-President, Henri Poupart-Lafarge, described the ambitious project as a “game changer for the Indian railway sector”.

The Indian Railways contract positions Alstom as the number one on the heavy-haul electric locomotives segment with over 1,200 double locomotives now ordered for the next decade.