The Hindu Business Line : GE offers to set up loco unit with Railways

On wheels
Rlys to set up units in joint venture with global firms
It expects demand for about 750 locos a year
Present loco manufacturing capacity is 300 per annum

New Delhi , Oct. 16

Within a few days of the Railways announcing that it would invite the private and foreign companies to set up rolling stock manufacturing units in joint venture partnership, international loco manufacturer GE today offered to set up a diesel locomotive manufacturing unit in collaboration with the Indian Railways.

However, it has also sought an "enabling environment" consisting of tax incentives, assured order volumes and promise of investment into technology upgradation in the unit.

Similarly, other major players in the rolling stock arena such as Siemens and Alstom have also indicated that they would be keen to set up units here subject to assured demand, amongst other incentives.

Joint venture

The Railways had announced a week ago that it plans to set up rolling stock units in partnership with international companies. It is likely to have a 26 per cent ownership in the joint venture and the partners would be selected through a global competitive bidding. While it has declared plans to go ahead for coach and diesel loco units, it is also considering similar plans for an electric loco unit.

Order book

Speaking at a conference on Monday on the Indian Railways, organised by the FICCI, Mr Pratyush Kumar, CEO, GE-Infrastructure, said, "We would desire a joint venture with the Railway-owned SPV to manufacture 6,000 horsepower (HP) locomotives." Mr Kumar did not comment on the cost aspect of locomotives.

Chittaranjan Locomotive Works is already manufacturing 6,000 HP electric locomotives with a technology transfer agreement from ABB (now acquired by Bombardier) — each locomotive costs about Rs 12 crore, said official sources.

India manufactures 4,000 HP diesel locomotives at DLW Varanasi at a cost of about Rs 12.5 crore each.

GE also said that a launch order of over 500 locos would be desirable, apart from the committed demand. The company also wants tax incentives so that it is not at a disadvantageous position vis-à-vis the captive manufacturing units of the Indian Railways. The Railways captive production units do not pay value-added tax and Central sales tax.

The company added that it would prefer a greenfield site rather than a brownfield one to build the facility. Mr Kumar pointed out that GE has also undertaken several public private partnership models to manufacture locos in Brazil, China and Kazakhstan.

Other partners

In Brazil, the facility is GE-owned and supplies rolling stock mostly to private customers. "Governments in China and Kazakhstan changed their tax structure to get the GE technology," said Mr Kumar.

In China, the State-owned manufacturer and GE have set up an SPV to build 6000 HP locos at an existing manufacturing facility. Similarly in Kazakhstan, GE has entered into a partnership with the State-owned manufacturing unit to provide technology for 4400 HP locos.

GE pointed out that its Bangalore-based John F. Welch Technology Center was a key contributor to its latest locos being used by the US railroads.

The Railways today said that it would move a proposal to the Union Cabinet for forming a body that would oversee policy and investments in these joint ventures. GE is likely to make a formal offer after the policy is finalised.

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GE offers to set up loco unit with Railways