Wabtec Corp plans to make Bihar factory into an export-oriented unit

In early 2019, Wabtec Corporation (formerly GE Transportation) appeared to be infusing a fresh lease of life to Marhowra in Bihar, a town then living on its past industrial glory.

At the time Business Standard described the place as a “graveyard, full of the tombs of long deceased factories” — Morton Confectionery, Saran Distillery, Saran Engineering Works and Kanpur Sugar Works, among others.

Four years down the line, Marhowra is considered an iconic symbol of Make in India, being home to one of the largest foreign direct investments (FDI) in the rail sector. Braving the pandemic, in February 2023, Wabtec completed the delivery of its 500th locomotive from Marhowra, on time. This was yet another milestone as part of the $2.5-billion deal signed in 2015 under the government of India’s “Make in India” public-private partnership programme to develop and supply 1,000 high-power diesel freight locomotives over a period of 10 years.

The road to success was not so easy for the project because in 2017, the Indian Railways came out with the concept of 100 per cent electrification, two years after the deal for diesel locomotive manufacturing in Marhowra was signed. At the time, General Electric, the parent of GE Transportation, went public with its concerns about the fate of its diesel locomotive project. Later, it was assured that the Indian Railways will be taking all the 1,000 diesel locomotives from Marhowra.

The factory opened for business on September 17, 2018, and a year later GE Transportation was merged with Pittsburgh-based Wabtec Corporation. But the old question remains: What happens to the factory after it delivers the 1,000th locomotive? Will it meet the same fate as other industries in Marhowra?

Wabtec thinks it has the answer. The company wants to develop Marhowra as an export-oriented unit. “We still have five years to go to deliver the 1,000 locomotives. There is a discussion going on whether we can leverage this facility not only for India but for the globe as well,” said Sandeep Selot, managing director and vice-president (sales and government affairs), South Asia and South East Asia, Wabtec.

“We are also looking at how we can do exports in partnership with Indian Railways. Is there a possibility we can partner with them to see if there are projects in neighbouring countries, and in areas where the Indian government is supporting and financing?” he added.

From a logistics point of view, South Asia, South East Asia and China may be advantageous for exports from India. “The free trade agreements that the government is negotiating may also make the export of locomotives easier. We will also support Indian Railways, being the only diesel locomotive manufacturer in India,” said Sujatha Narayan, senior vice-president and regional leader, Wabtec.

Globally, Wabtec is aggressively looking at battery electric, hybrid and hydrogen locos, too. As a company, India’s electric push is helping Wabtec, being one of the largest component manufacturers in the country. “It is important to note that all the critical components of an electric locomotive today are supplied by us — be it pantographs, brakes, couplers, all those items are part of the Wabtec portfolio, which is manufactured in the country. In that sense, the push for electric locomotives, directly or indirectly, is helping us,” Selot added.

According to the company, all rolling stock on the rails of India has Wabtec components. It is the largest brake supplier for rolling stock in India, supplying for Indian Railways and Metro trains. Now, it is in the process of supplying brake systems to the Vande Bharat superfast trains. Other than units at Hosur in Tamil Nadu and Baddi in Himachal Pradesh, the company is in the process of constructing a Rs 200-crore plant in Rohtak.

A strong order book of around $1.5 billion itself is proof of Wabtec’s growing strength in the Indian rail sector. In CY2022, the US major’s India business size was seen at $472 million. The India arm is expected to become a $1-billion enterprise by 2025.

“When we say enterprise, it means not just for the business in India, but also what India does for the globe,” Narayan said. She added that while the India business is likely to touch $750 million by 2025, exports from the country will increase from $100 million now to around $250-300 million. “This includes sourcing of components from India for our global factories, manufacturing of products in our factories for global customers, and engineering services that we provide from our Bengaluru centre,” Narayan added.

Wabtec is aggressively expanding the digital side, too, through predictive maintenance. In March 2022, it had won a contract from Indian Railways for its Online Monitoring of Rolling Stock (OMRS) project. The new automated OMRS system is part of Indian Railways’ “Smart Yard” initiative to improve the availability of the railways’ fleet of coaches, wagons and locomotives by detecting and addressing defects and preventing in-service failures. The company has 111 sites for wheel and bearing monitoring, which will be commissioned by the middle of next year.

“Moving forward, the Railways would like to deploy imaging technology to help them identify parts that are hanging or missing or factors like oil leaks. It is a space we expect to evolve in the coming two years. Metros are also looking at these technologies,” Selot said.

For the time being, however, the company’s main focus is on Marhowra completing the remaining 500 locomotives for supply to the Railways and developing the region as a global manufacturing unit for Wabtec.

Marhowra’s track record

$2.6 billion: Value of contract for supplying diesel locomotives to the Indian Railways

Rs 1,200 crore: Overall infrastructure development in the region

Nov 2015: Wabtec (then GE Transportation) gets Railways order

Oct 2017: The first diesel-electric locomotive built by General Electric as part of the deal arrives in India

Sep 17, 2018: Wabtec starts operations at the unit

Feb 2023: Wabtec delivers 500th locomotive

Wabtec Growth Road map

$472 million: India business size in CY2022

$1 billion: Target for 2025, including exports

$1.5 billion: Order book size