New Delhi: The Indian railway prefer MNCs to domestic companies in terms of assigning the contracts. This year five MNCs, that pitched for two separate contracts worth eight billon dollar to deliver electric and diesel locomotives, has been short listed by the Indian railways. Till date, Indian companies like Chittaranjan Locomotive Works, Bharat Heavy Electricals and Diesel Locomotive Works provided the railway with electronic as well as diesel locomotives.

It is due to core pressure of lack of enough capacity that the locomotive deals are passed on to the foreign MNCs like Siemens AG, Bombardier Transportation India, a unit of Canada's Bombardier and France's Alstom SA who would bid for 660 electric locomotives. And U.S. based General Electric (GE) and Electro Motive Diesel (EMD) is bidding for 1000 diesel train engines. However, according to Mint, its only GE, Bombardier and Siemens who have confirmed.

Once the winners are finalized the firm to manufacture electric locomotives will be provided space at a factory in Madhepura, while for the diesel engines will be developed at Marora. According to the deal, 26 percent of equity stakes of each project will be held by the railways and the remaining 74 percent shall be under the control of the concerned manufacturing firm. The winning bidders have to supply locomotives to the railways over a 10-year period and also maintain them for 15 years, according to a Planning Commission official, who did not wish to be named. "These are long-term contracts spread over 15 years, so it will give the companies a foothold in the Indian market and will allow them to exploit the economies of scale because they will already have factories here," says PricewaterhouseCoopers.