MUMBAI, India – General Electric Co. won a $2.6 billion contract to build and maintain diesel locomotives for India’s congested state-owned railway, the company’s biggest deal in a country striving to modernize the oldest network in Asia.
GE said Monday that it will invest $200 million to build a factory in northern Bihar state under a joint venture with Indian Railways. The goal is to produce 1,000 diesel locomotives over 11 years, one of Prime Minister Narendra Modi’s biggest steps toward reversing chronic network under-investment and spurring domestic manufacturing.
GE has a locomotive manufacturing facility in Fort Worth that opened in 2014.
Modi’s vision is to add track, world-class stations and bullet trains to spur the economy. India also plans to transport more freight, such as coal, on dedicated lines. The challenge is finding the money. The contract follows the premier’s decision to open the doors to foreign investment in railroads last July, part of a push for an ambitious 8.5-trillion-rupee ($128 billion) revamp of the railway through 2020.
GE said the deal is the largest in its 100-year history in India. The Railway Ministry said the factory will supply 4,500 horsepower and 6,000 horsepower engines. The company is yet to sign the pact to formalize the contract.
Dalian Locomotive & Rolling Stock, CSR Corp., and Electro- Motive Diesel Inc. also bid for the tender in 2013.
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.