New Delhi: To leverage India’s ambitious infrastructure agenda to its advantage, General Electric Co. (GE) is willing to explore tie-ups with conglomerates in the country to set up finance companies.
Disclosing this, Jeffrey R. Immelt, GE’s chairman and chief executive officer, said that in India the energy business would be a key thrust area and that it will be setting up a new multi-modal facility entailing a fresh investment of $50 million (Rs225 crore).
The new initiatives are consistent with GE’s global strategy to generate 60% of its group revenue from outside the US and from emerging markets such as China and India. Immelt is in India as part of the meeting of GE’s corporate executive council (CEC). For the first time, GE is hosting CEC, made up of leaders from across the company, outside the US.
Ruling out any entry into formal banking, Immelt maintained that his company was looking to expand the finance business in India.
“In some ways, not just in India, but in China as well, the growth of conglomerates parallel GE,” he said. “So when you think about Tata, when you think or some other multinational conglomerates in India, they make natural partners with us when we think about the ability to offer service expertise in platforms.”
Sourcing the trillions of rupees needed to fund the country’s infrastructure plans is a challenge, the 2010-11 economic survey said. Projected investment required for infrastructure development during the 12th Plan (2012-17) is Rs40.99 trillion. Half of this is expected to come from the private sector.
GE earns around $3 billion in revenue every year from its India operations.
In a separate development, GE plans to construct a 400,000 square feet multi-modal facility, which can be scaled up to 700,000 sq. ft, and would create up to 3,000 jobs. GE employs around 12,000 people in India.
“We are going to invest in a multi-business manufacturing site in India, so it’s going to give us a lot of mobile capability... In terms of timing, I would expect within the next quarter (April-June) we would announce the final facility and begin construction in the following quarter (July-September),” said John Flannery, chief executive of GE India, who accompanied Immelt at the press conference hosted by the company in the Capital.
While continuing with its decentralized business model, GE is open to the idea of manufacturing large-size steam turbines in the country.
“The single largest component driver would be our energy business. In the steam turbine area, the Chinese are quite competitive, maybe because they have had a big local market. Other than that, we are able to stand toe-to-toe against anybody in the world and see what happens. Whether it’s 25% or 35%, we will be competitive on cost or on technology, and we will have aspirations,” said Immelt.
GE already has a tie-up with Triveni Engineering and Industries Ltd through its Indian arm to manufacture steam turbines in the 30-100 megawatt range, which will be exported to markets in West Asia, Indonesia, Europe and Latin America, besides being sold to captive and utility power plants in India.
“On bigger steam turbines, we have got some new designs and we are quite hopeful that we will get some work here and also do some production joint venture,” Immelt said.
Mint had reported on 12 April 2007 about GE’s plans to manufacture steam turbines for power projects at a proposed new factory.
While GE has an arrangement with Bharat Heavy Electricals Ltd for providing gas turbines to power projects, the Indian state-run company has an agreement with Siemens AG for steam turbines. GE and Siemens are major rivals globally.
India has seen a lot of new entrants in the equipment manufacturing business such as the joint ventures between Larsen and Toubro Ltd and Mitsubishi Heavy Industries Ltd, Toshiba Corp. of Japan and the JSW Group, Ansaldo Caldaie SpA of Italy and GB Engineering Enterprises Pvt. Ltd, and Alstom SA of France and Bharat Forge Ltd.
Responding to a query on the impact of India’s civil nuclear programme in the context of the quake and tsunami-related damage to facilities in Japan, Immelt maintained his stand on India’s Civil Liability for Nuclear Damage Bill. The legislation has attracted the ire of US nuclear energy firms as well as lawmakers.
“I really think that the comments we have made about investments in nuclear energy in India have not changed based on the tragedy in Japan. We have said consistently that we believe the regime in India has to fit the global liability regimes in nuclear power. We said that six months ago, we have said that 18 months ago and I feel the same today,” said Immelt.
Elizabeth Roche, Appu Esthose Suresh and Shauvik Ghosh also contributed to this story.