In November 2015, the rail ministry, awarded a Rs 14,000-crore contract to General Electric to set up a diesel electric locomotive factory in Marhowra, Bihar. The bid for Madhepura factory for building modern electric locomotives, was awarded to the French company Alstom.
These two projects were showcase projects and huge investments of around Rs 40,000 crore over the next five years was expected for the two projects.
However, with the recent change in dispensation at the railways ministry, the focus has now shifted to a complete elimination of diesel locomotives and a promotion of electric engines. The govt. has therefore considering bringing the curtains down on the Marhowra plant as it wants to focus its resources in scaling up of electrification of the entire rail network.
Investment at the Marhowra factory was calculated at a little above Rs 2,000 crore. It was to manufacture at least 1,000 diesel locomotives over 10 years. This change of gear by the govt post award of a contract may cast a shadow on the investor sentiment, given the project's huge foreign direct investment component.
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