U.S. based General Electric (GE) has announced it has inked a $2.6 billion contract to supply India with 1,000 diesel locomotives. The deal is scheduled to take 11 years to complete. GE will also build a $200 million manufacturing facility in Bihar, India's third most populous state. Additionally, the company will form an official joint partnership with Indian Railways.
GE CEO Jeff Immelt says the project adds to India's claim to being the "growth engine for Asia." "It is a major advancement and milestone for India and for GE," he says.
Railway reform is one of the top priorities of India's recently elected Prime Minister Narendra Modi, who opened the sector to foreign investment as part of his "Make In India" campaign. The program aims to turn India into a global manufacturing hub. It has already attracted investment from General Motors and Foxconn.
The GE deal, is the company's largest in its 100-year history in India, and is the latest sign that Modi is serious about making the country's railway system more efficient.
India has one of the world's largest rail networks. The 162-year-old system has more than 40,000 miles of track, used daily by 11,000 trains. Indian Railways employs 1.3 million people, making it one of the largest employers in the world.
The rail system transports tens of millions of people each day for both inner city and long distance travel. Tickets are highly subsidized. Bucking global trends, railways remain a prime mover of commercial goods and passengers. India’s tourism officials also use the “mystique” of traveling by train in India as a major selling point.
However the rail system has a history of being plagued by inefficiencies and budget shortfalls which President Modi promised to fix if elected.
The GE deals shows that he wants to deliver on that promise.