GE’s Jeff Immelt bullish on India, but points to hurdles2 min read . Updated: 22 Sep 2015, 01:15 AM IST
GE chairman, PM Narendra Modi discuss India's plans to build two locomotive plants, among other issues
General Electric Co.’s (GE) chairman Jeffrey R. Immelt sounded bullish on India, emphasized the “hope" riding on Prime Minister Narendra Modi, and said he is optimistic that a 10-year-old plan to build two locomotive factories in India will finally get underway (and that his firm would land the contract).
On Monday, Immelt met Prime Minister Modi. He said he spoke, among other issues, about the locomotive plants because it was important to his company and any progress would send out a message to investors.
He said he was impressed by the progress he sees in the country, which he described as an important one for GE.
“Maybe one of the most exciting things since the last time I was here almost 18 months ago is the ability to do manufacturing in India," Immelt said. “I think we have seen the country continue to evolve from a market to an engineering centre and now to a manufacturing centre."
GE (along with Alstom SA) has 21 manufacturing facilities in India today, Immelt said, but declined to put a number to the investments his company would be committing to India.
Earlier this year, GE opened a multi-modal factory in Pune, a facility that can make several of GE’s products.
Yet, Immelt, who has overseen the reinvention of GE as a manufacturing conglomerate—in a way, returning the company to its roots and moving away from financial services—and who, more recently, won approval from the European Union for his company’s acquisition of Alstom, also highlighted the problems multinationals such as the one he runs face in India.
Immelt specifically highlighted problems in the power sector—where there is no market pricing and state electricity boards are all but bankrupt—and in nuclear energy, where the unresolved issue of supplier liability has kept away companies such as GE.
India and the US have been unable to resolve disagreements over suppliers’ liability in India’s Civil Liability for Nuclear Damages Act that was expected to usher in US private investments into Indian nuclear plants. Of India’s installed power generation capacity of 275,912 megawatts (MW), nuclear power plants have only 2%, or 5,780MW, share.
At one point in his conversation with reporters, Immelt spoke of his long stint in GE (33 years) and the company’s own experience in India, as he sought to convey how it has always been long on India—for a long time.
Indeed, in the 1990s, GE got serious about India for the first time, articulating a 2B by 2K objective ($2 billion in revenue by 2000). That wasn’t to be. Understanding the difficulties involved, the company started focusing in India as a resource, especially for back-office processes for its finance businesses. But progress on several of the businesses GE is in—power, transportation, aviation—was slow.
Yet, even in the case of the controversial Dabhol power project (developed by Enron in the 1990s) where GE was the equipment supplier, the company did get paid, Immelt said—highlighting the sanctity of contracts and the rule of law in India.
It wouldn’t hurt to move a bit faster, though, Immelt suggested. The locomotive factories plan has been in the works for 10 years. GE along with Alstom, Bombardier Inc., Siemens AG and China’s CNR Corp. Ltd and CSR Corp. are in the fray. The plan has been characterized by starts and stops (and more stops than starts), but, Immelt said, it has never gotten as far as it has now (under the current government).