In an effort to modernize its vast train network, India has looked overseas for help. General Electric (GE) and France's Alstom won the bid to overhaul the country's railway system - a tall order as India has the 4th largest train network in the world, reported Reuters.
The $5.6 billion contracts are part of the first major step in India's system-wide refurbishment of its railways, said Prime Minister Narendra Modi.
A total budget of $137 billion will be apportioned for the entire project, which has a 2020 deadline, he added.
GE's $2.6 billion cut of the deal includes providing India with 1,000 locomotives that run on diesel. A small chunk of the contract price, $200 million, would go to the establishment of plants and warehouses, according to the BBC.
As for Alstom, the multinational company was contracted to deliver 800 units of electric locomotive. Similarly, the rail transport giant would also build a factory in Bihar in Eastern Indian. Alstom got the bigger share of the contract with $3 billion.
Both contracts would take about 11 years until completion.
India's rail transport industry is no stranger to foreign intervention. Last year, India gave 100 percent control of several parts of its railway network to a number of foreign investors.
The step can be seen as part of Modi's "Make in India" initiative. The campaign generally aims to have multinational and domestic conglomerates make India their manufacturing hub.
The first half of this year saw India's direct foreign investment at $19.4 billion. Taiwan-based iPhone manufacturer Foxconn announced that it would put up factories in the country.
GE and Alstom's contracts are the largest to be awarded to a foreign firm to date, Reuters added. Contracts for the project are also available to local private firms. Bidding is ongoing.
India's railway system employs a whopping 1.3 million workers and serves as the chief means of transport for over 23 million commuters daily, the Wall Street Journal said.
The system is old. Dating back from the British colonial period, it is no surprise that trains run at a frustrating 50 kilometers (31 miles) per hour, directly affecting the productivity of the commuting workforce.
Improving infrastructure and putting the spotlight on infrastructure are expected to fill the developmental gap between India and its Asian neighbors.
"Where there is infrastructure, the pace of development quickens," Mr. Modi said at a groundbreaking ceremony for the construction of an expressway.
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