The Global Manufacturer
Indian prime minister Narendra Modi and the GE logo. Mark Nolan, Getty Images; inset: General Electric

India Talking to GE to Tweak $2.5 Billion Locomotive Deal

Remember when India and GE signed a 2015 deal to build a factory and 1,000 diesel locomotives? Now India wants to go electric and GE says that would “undermine a promising infrastructure project.”

Two years after signing an agreement with General Electric Co. for a local diesel-engine factory, India said it is in talks to alter the contract as it favors electric locomotives.

Railway Minister Piyush Goyal said the government is negotiating ways to tweak the agreement as the nation shifts to less-polluting modes of transportation. The two sides have considered options including exports of some of the engines and making them more fuel efficient to reduce pollution. GE doesn’t make electric locomotives.

“Electrification of railway tracks is in the interest of the people of India,” Goyal told reporters in New Delhi on Thursday. “Can we look at opportunities going forward, where we can meet the twin objectives of reducing pollution, saving costs and making sure that the contract continues to serve the people of India in the best interest of the nation?”

India and GE signed the agreement in 2015 to establish the factory in Bihar state to build 1,000 diesel locomotives for Indian Railway. In a statement on Tuesday, the Boston-based company said if Indian officials walked away from the deal, it will damage efforts to create jobs and altering it will “undermine one of the most promising infrastructure projects in the country.” India may also be on the hook for “substantial fees associated with this project,” GE said.

Allaying concerns the deal is in jeopardy, Goyal said the factory is progressing as per plans and signaled there’s no plan to review the contract. His comments come a day after GE vice chairman John Rice’s scheduled meetings with Indian officials on Wednesday.

By Bibhudatta Pradhan

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