FDI in Railways: GE, Alstom to set up Rs 40,000 cr factories to provide 1,000 locomotives

New Delhi: Railways on Monday awarded contracts to global giants GE and Alstom for setting up of about Rs 40,000 crore worth diesel and electric locomotive factories in Marhora and Madhepura respectively in Bihar, marking the first major FDI in rail projects.

Dubbed as the first big ticket project under 'Make in India' initiative in the public transporter, GE and Alstom were issued the letters of award for the high value contract acceptance letters, according to a senior Railway Ministry official.

The mega projects approved since 2007 by the then Railway Minister Lalu Prasad, got mired in controversies, years of red tape and indecision by successive ministers, finally saw the light of the day during Suresh Prabhu regime.

While it will cost Rs 2,052 crore for setting up the diesel locomotive factory at Marhora, the electric one will cost Rs 1,293.57 crore at Madhepura.

The contract agreements with both GE and Alstom will be signed in a month, the official said.

The projects, closely monitored by the PMO, involve manufacturing of 1000 diesel locomotives and 800 electric locomotives over next 10 years and is worth about Rs 40,000 crore.

US multi-national GE, the lowest bidder for the Marhora diesel locomotive factory, is expected to manufacture the 1,000 locomotives over 10 years. While 100 will be imported, rest will be manufactured at Marhora as part of the Make in India initiative. There will be two types of diesel locos --- 4500 horse power and 6000 HP - manufactured by GE in Marhora.

There will be two loco sheds at Gandhidham and Bhatinda for maintenance of the modern diesel locomotives.

French major Alstom, the lowest bidder for the Madhepura electric locomotive factory, will manufacture 800 high power electric locomotives locos in the next 10 years. It will manufacture 12,000 HP electric locomotives to be used for heavy haulage.

According to the contract, while 5 diesel locos will be imported, the rest 795 will be manufactured at Madhepura as part of the project. Maintenance of the locos will also be the responsibility of the company and for this it will set up two maintenance sheds at Nagpur and Sharanpur.

Of the 1,000 diesel locomotives to be manufactured by GE, 700 will be of 4,500 horse power (HP) and 300 of 6,000 HP.

With the government allowing 100 per cent FDI in Railways, the setting up of the two locomotive plants in joint venture mode is crucial for the public transporter in order to boost its infrastructure.

Railways will have 26 per cent equity and also provide land while the global players will have 74 per cent equity in each of the plant.