General Electric warns $2.6 bn diesel locomotives contract rejig will undermine 'Make in India' drive

General Electric Co said on Tuesday that the government’s ‘Make in India’ initiative would be undermined if the country’s railway ministry went ahead with changes to a joint venture with the conglomerate.

Any changes to the joint venture will put future foreign investment at risk and cause the government to incur substantial costs, GE said in an emailed statement.

GE had won a $2.6 billion contract in 2015 to supply Indian Railways with 1,000 diesel locomotives.

The Economic Times newspaper reported last week that the ministry told the company the railways would not require diesel locomotives in the future and offered the American company an option to manufacture electric locomotives at its upcoming factory in the eastern state of Bihar.

Under the deal, GE is also to build two maintenance sheds elsewhere in the country to service the locomotives over an 11-year period.