New Delhi: India’s state-owned Bharat Heavy Electricals Ltd (Bhel) has offered to supply 100 diesel locomotives to Pakistan as part of a plan to modernize the country’s rail infrastructure.
If the public sector unit clinches the deal, it will be the first such order for an Indian manufacturer.
The proposed deal, valued at around Rs 1,000 crore, comes against the backdrop of newfound bonhomie between the two countries. India-Pakistan ties have picked up since last year and there has been a marked improvement in economic cooperation.
“China had earlier supplied around 1,000 locomotives to Pakistan, of which 800 have developed defects. Their railway network is down,” said a senior Bhel executive, requesting anonymity. “We made an independent offer of 100 locomotives to a Pakistani delegation which had come visiting recently. We are now working with their ministry of railways for the order to fructify. Once this happens, we may get more orders given the huge demand,” he said.
Rites Ltd, an Indian Railways subsidiary, had earlier made a proposal to Pakistan to help improve its rail infrastructure.
“Ours is a proposal independent of Rites. Even Indian Railways sources around 50% of the equipment from us for manufacturing diesel locomotives,” the Bhel executive said. “This order will also help towards improving the relationship between the two countries.”
Trade is being seen as the driver of recent efforts to strive for better relations between the neighbours. These include India’s in-principle decision to allow Pakistani firms to invest in the country, the setting up of an India-Pakistan joint business council, and talks between the Reserve Bank of India and the State Bank of Pakistan to allow banks from both the countries to open branches in each other’s territory. These initiatives received a fresh boost during Pakistan President Asif Ali Zardari’s visit to New Delhi on 8 April.
Another senior Bhel executive aware of the development said, “An offer has been made for 100 diesel locomotives to Pakistan during a recent visit of a delegation from there. Ours is an independent offer, given the expertise we have in diesel locomotive manufacturing. We are looking at more orders from Pakistan.”
The South Asian neighbours had tentatively resumed their diplomatic dialogue, suspended after the terrorist attack of November 2008, in February last year. The two rounds of talks have since yielded a series of landmark measures to boost trade and liberalize visa procedures—moves aimed at slowly rebuilding the trust shattered by the 26-29 November Mumbai attack when 10 Pakistan-based terrorists targeted locations in India’s financial capital.
Questions emailed to spokespersons for India’s ministry of external affairs and the Pakistan high commission on Wednesday remained unanswered at the time of going to press.
Bhel is aggressively eyeing sectors such as railways for orders to tap Indian Railways’ expansion drive, as it fears that its domestic market share may decline due to increasing competition from local and foreign power generation equipment manufacturing firms. Power sector analysts say locomotive manufacturing makes good business sense for Bhel because it offers a good avenue for hedging against any abrupt change in business prospects in the power sector.
The power equipment maker’s order book fell to Rs 22,096 crore last year from Rs 60,000 crore in the previous fiscal because of sluggish power sector demand.