No plans to scrap General Electric locomotive plant, says Piyush Goyal

General Electric's proposed diesel locomotive plant in India has some hope yet. Railway Minister Piyush Goyal on Thursday said that the proposed plant would be set up at Marhowra in Bihar as planned, according to a Reuters report.

The minister was seeking to allay concerns that the state-controlled network was making changes to the contract. "Work in factory is going on as per plan," Goyal told reporters, Reuters said on Thursday.

This is in response to the company's statement that cancellation of the $2.6-billion deal to set up the factory will undermine the government's 'Make in India' initiative and put future foreign investments at risk, financial daily Business Standard (BS) reported on Thursday.

The BS report said that addressing a press conference in Delhi, Goyal said, "The Marhowra factory is on track. No change is happening on that. Work on the site has started and the first loco is on its way to India."

The railways ministry had said after its September 7 review meeting that it wouldn't need diesel and suggested that GE might want to make electric engines instead. This was ostensibly because of the government's desire to save on fuel and maintenance costs.

The apparent policy shift had raised fears for the future of investments in the country, especially Prime Minister Narendra Modi's indigenisation drive to create tens of thousands of jobs for a swelling workforce.

But Goyal said the government had no plans to make sudden changes in policy and there was no threat to the GE plant in eastern India, the Reuters report said. "It is as planned and will go as planned. In future, if we want to convert diesel to electric plant, it is not rocket science," added Manoj Sinha, minister of state for railways, was quoted by Reuters as saying.

Goyal was quoted as saying that the government does not make any sudden changes in policy: "We take considered decisions... the Marhowra factory is being set up and I think it's on track."

GE had won the $2.6-billion contract in 2015 to supply Indian Railways with 1,000 diesel locomotives and began work on a plant in one of the largest direct foreign investment projects. GE has investments in India's power, healthcare and transportation sectors.

Goyal said he had fruitful discussions with GE executives and had asked them to explore cutting costs, the Reuters report said, adding that GE has already shipped its first diesel locomotive to India and is completing the diesel locomotive factory. It has created around 1,000 jobs at the plant and a maintenance shed, and 5,000 jobs in the supplier network.