Indian Railways signs $6bn contracts with GE and Alstom for 1,800 locomotives

30 November 2015 (Last Updated November 30th, 2015 18:30)

Indian Railways (IR) has signed two contracts with a combined value of around Rs400bn ($6bn) with US-based GE Transportation and French engineering firm Alstom for a total of 1,800 freight locomotives.

Indian Railways (IR) has signed two contracts with a combined value of around Rs400bn ($6bn) with US-based GE Transportation and French engineering firm Alstom for a total of 1,800 freight locomotives.

Earlier this month, the companies were issued the letters of award (LOA) to establish diesel and electric locomotive factories in Marhowra and Madhepura in the Indian state of Bihar.

Most of the 1,800 locomotives will be assembled at these purpose-built plants as part of the government’s ‘Make in India’ initiative.

"We are committed to addressing the ever-growing market in India."

The contracts mark the Indian Government’s first major foreign direct investment (FDI) in rail projects.

Under the $3bn contract, Alstom will deliver Indian Railways with 800 electric locomotives in the next 11 years and set up an electric locomotive factory (ELF) in Madhepura.

At the ELF, the French firm will manufacture 12,000HP electric locomotives for heavy haulage applications.

As part of the project, five diesel locos will be imported and the remaining 795 will be manufactured at Madhepura.

The project will be executed by a recently formed joint venture (JV) in which Alstom and Indian Railways respectively hold a 74% and 26% stake.

According to Alstom, the delivery of the locomotives will take place between 2018 and 2028.

Alstom Asia Pacific senior vice-president Dominique Pouliquen said: "We are committed to addressing the ever-growing market in India by expanding our local footprint and bringing technological expertise and know-how to the country."

As part of the $2.6bn deal, GE will provide the railways with 1,000 diesel locomotives over the next 11 years, as well as invest $200m in a plant and maintenance sheds.

The deal will see GE build a diesel locomotive factory (DLF) in Marhowra, in addition to maintenance sheds at Bhatinda, Punjab, and Gandhidham, Gujarat.

To build and operate the new DLF facility, a new joint venture will be established between the Indian Ministry of Railways and GE Global Sourcing India.

In addition, Alstom also secured a €200m contract from Dedicated Freight Corridor Corporation of India (DFCCIL) to provide electrification, signalling and telecommunications systems for a 343km section of the Eastern Dedicated Freight Corridor that is expected to be completed by 2019.

The deal will also see Alstom build the stations and provide the control centre.