Indian Railways have finally given green light to a historical decision, which will have a major impact on the Make in India vision as well as health of Indian Railways.
Railways Minister Suresh Prabhu has approved FDI project worth Rs 2400 crore for manufacturing world class diesel and electric locomotive factories in Bihar.
The History
In 2008, then Railways Ministry Lalu Prasad Yadav has announced plans to establish locomotive factory in Bihar, in collaboration with foreign investors. Due to paucity of funds, Indian Railways was stuck with old, British era locomotive factories, and the much needed infusion in new technology was missing.
However, the project was stuck in red tape, and government approvals, and nothing much happened.
Last year, we had reported that Indian Railways has finally given approval to FDI in Railways infrastructure projects, and highlighted the 17 key areas where such investments can be made by foreign investors and the underlying guidelines. Locomotive factory was certainly among these key areas, but no major announcement was made since then.
Even in the Railways Budget 2015 announced last month, there was no specific announcement related with FDI.
Current Approved FDI Projects
As per the proposed plan, two locomotive factories would be established in Madhepura and Marhora which are in Bihar. Total investments in each of these factories would be Rs 1200 crore, which means total investments would be worth Rs 2400 crore. These two projects would be under public-private partnership with Railways having 26% and foreign investors having 76% stake.
Factory in Madhepura will manufacture 800 electric locomotives over a period of 11 years. Each of such engine would be 12,000 Horse Power strength. Out of 800, it has been proposed that 5 would be imported and 795 would be manufactured in-house.
Marhora factory will manufacture 4500 Horse Power and 6000 Horse Power diesel locomotives, using modern technology. Over a period of 10 years, this plant is expected to produce 1000 diesel engines for Indian Railways. 700 locomotives of 4500 HP and 300 locomotives of 6000 HP would be manufactured.
Both of these projects are part of 8 high profile 8 infrastructural projects being monitored directly by the Prime Minister Office.
Request for Proposals (RFP) documents for both of these projects are ready, which have all the financial details and conditions related with the FDI in these factories. Bidding have already started, and as per insider reports, global engineering biggies Alstom, Siemens, GE and Bombardier are vying for the Madhepura electric locomotive project meanwhile GE and EMD are shortlisted for Marhora factory.
Ministry will open up the bidding as on August 31, 2015, and finalize the contractors. 2 pre-bid meetings are scheduled before that.
To know the complete details about FDI policy initiated by Indian Railways, and to view the 17 key areas where more much FDI projects maybe initiated in coming days, you can view this document.
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