In the absence of responsible open tendering process, the versions of Railways modernization programmes have been tendered three to four times over the last 20 years, and for various reasons, they have been pulled back. We have tried to compete in every one, and are perhaps the only company to participate in every one. In one, we were the only bidder but we didn’t bag the deal and that didn’t make us all that happy. We need a firm declaration from the Government of India on such major projects. I believe Modi Government will deliver that confidence.
For GE, rail modernization enjoys top priority in India: John G Rice
John G Rice, Vice-Chairman of the $147-billion GE, with operations in 170 countries, was in India to inaugurate the Pune manufacturing facility of the quintessential business behemoth. In an interaction, Rice talks about the new growth opportunities and the improved sentiment with the new government in place, especially in defence and railways. He also stressed that gas prices in India should be in the $8-9 per mBtu range to make gas-based projects viable in India.
GE has been talking of enhancing investments in India for a while now. It actually had to pull back when things slowed down under the previous government. How do you now see the journey ahead with the new government under Narendra Modi?
When we look at India, there is no mistake from the GE perspective as to why we are here. We can do a lot more. We have been frustrated in the past because things didn’t move quickly, or at all. However, we are encouraged with the new government and are hopeful that the next Budget moves forward in some key areas. We would certainly put rail modernization on top of any list. We will be willing to make local manufacturing capabilities around and are prepared to invest several hundred million dollars to make it happen.
How do you see the new government’s performance so far?
I think the PM has assembled a very competent leadership with many good ministers. His idea is to run the government like you run a business with accountability, expectations, results and you measure goals versus accomplishment. We like all of that because that’s the way we live our lives in GE.
Do you have a new India strategy now?
I think we want India to be a bigger market for us as it’s less than 2% of our global infrastructure orders and, given the size of the market, it needs to be much bigger. But orders and revenues are one matrix and we fall short on that. Things we do here help in other places. In Bangalore, we have 5,000 engineers and the kind of work they do helps us in many global markets. Pune, the facility we inaugurated, is another example. There is a number of important factors that make us happy on what we do in India, even though we have not had the success we like to have.
With government allowing up to 49% FDI in defence sector, what is your preparedness?
We are evaluating various opportunities to get into defence manufacturing in India in the aviation and other potential sectors. We are in talks with the Indian partners and soon you may see some of the talks translating into joint ventures.
You have been eyeing railway projects for quite some time but without any success. Why?
It’s because of absence of responsible open tendering process. The versions of modernization programmes have been tendered three to four times over the last 20 years. And for various reasons, they have been pulled back. We have tried to compete in every one, and are perhaps the only company to participate in every one. In one, we were the only bidder and we didn’t win and that didn’t make us all that happy. We need a firm declaration from the government.
How would you take advantage to expand more under the ‘Make in India’ policy?
We always have opportunities to expand in Pune to second phase and beyond that. The Pune facility, over time, might have 2,000 people. We have 30,000 people in India now and would add another 8,000. Besides, we will expand in other states and other facilities in India in other businesses. There is not a business that we have that doesn’t have manufacturing in India. With phase-2 expansions, our total investments in Pune would be $200 million and there would be more.
India and the US moved forward with the nuclear deal. Are there any concerns yet to be resolved?
We are happy that there was a dialogue and we can participate. We don’t think everyone has got all the answers yet. Clarifications with respect to the liability clause are not clarified entirely. It’s important for power generation requirements for the next 30-40 years.
Your business has been affected with oil suddenly falling to $50…
Oil and gas this year will be flat or down to 5% as some projects may be delayed. We haven’t seen project cancelations yet. Big projects in deep water can’t be turned off because you lose resources. We have made some adjustments. So, oil and gas are on the negative side, but we get more business in aviation and rail as the fuel cost is down.
GE has just allowed its investors to nominate directors. Will this de-conglomerate GE as many investors have been demanding?
It’s been an interest among investors. We talked to our investors and we concluded that it makes sense to do it. We think the whole is better than sum of the parts. Our businesses share technology, leadership, new concepts get spread across our businesses. We call it the GE store. Our capability to take ideas from one business to give it to others makes us stand out from others. The answer to your question plays out over decades not months.