"The expansion and modernisation of the DLW is required to increase the production capacity of high horse power locomotives at the plant," said a senior Railway Ministry official.
The official said the work was being undertaken as part of the Prime Minister's thrust on expansion and upgradation of the railways.
Automatic high capacity storage system, modern material handling equipment, a new loco assembly shop, and induction of high productivity machines are part of the Rs 213 cr project.
The target date for completion of the project is March 31, 2017.
Since the inception of the plant, DLW has manufactured 523 locomotives so far.
Providing comfort to loco pilots, the Prime Minister will also flag off a Rs 14 crore worth 4500 HP diesel locomotive with twin AC cabin tomorrow.