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Following is the transcript of a CNBC interview with John Rice, Vice-Chairman of GE at the WEF India Conference.
All references must be sourced to a "CNBC Interview"
Interviewed by Martin Soong, Anchor, CNBC Asia Pacific
Martin Soong (MS): So the headline for GE is late last year 2.6 billion dollar contract for a thousand diesel electric locomotives for India it's a JV. But this is the biggest deal done to date in India. It's huge.The state of play - where are we at now.
John Rice (JR): Well we've broken ground. We've been through all the permits which numbered over 40. The state the federal the local governments worked very hard to do this really quickly so we're quite pleased about that. And we're under way and we expect to be producing locomotives there over the next 24 months. And the first one rolls out when 2018 and in 2019 we'll continue to add to what we're doing in the facility to produce to make more of the content local.
MS: Okay. And we talked about earlier where we had a chat. I mean this facility ultimately is going to be, end up being an export facility 4G is not just meant for India.
JR: That's what we want you know today 50 per cent of everything we manufacture in India gets exported and it is the way you know that you are achieving a global standard. Your ability to compete with your other facilities produce things on a globally competitive basis. We're happy with that number and we'd love to see 50 per cent of the locomotives produced in this facility exported. We still have to work out the details in order to make that happen. We'd also like the government to be supportive of exports and we've talked to them about establishing export credit agencies to help Indian-based manufacturers participate in global markets.
MS: I want to go down there a little bit further here because it segues very nicely into the government's view new-ish policy of what they call Make in India which has its detractors I have to say, but if you add on Make in India for export you think that actually makes a lot more sense.
JR: I think it makes a ton of sense. I would look at every facility manufacturing facilities certainly an industrial site as to its export capability. You know too many times when people invest like we put $300 billion into Bihar where we're producing locomotives are 200 million into poor where we do a number of things to support our businesses. Nobody talks about training. Nobody talks about how much money we're going to spend on training which ultimately the skill of the workforce and how they develop over time determines how big and how competitive you are.
MS: Now this is a very interesting point because I mean the size and the scale of the project, $2.6 billion the biggest deal that he's ever done here. And the fact that diesel electric locomotives these days, I mean these, these are your, your granddad's trains anywhere they're electronic and they're fly by wire and they're very, very sophisticated. I ask you really on how much technology transfer there is or offset there is in this deal and he said look we're not quite there yet because in Bihar one of the poorest states in India you're literally starting from ground zero.
JR: We have to put in wall to wall training capabilities so we establish relationships with local schools, local institutions. We have to train an ecosystem too because we need a supply base that can support our requirements so we're training our employees our suppliers employees because we want to build to that standard which will allow us to achieve our localisation goals but also export.
MS: So this is very much a development project as well?
JR: Totally. And if you really have to think about it like an ecosystem I know that the term is overused sometimes but it encompasses many different things. We work with banks to provide working capital for our supply base because they need they need money to invest in inventory to support our production requirements so the way you think about that this now is not just a simple investment a localisation per cent but how you're going to create this ecosystem that allows you to build a world class locomotive.
MS: Fascinating much more than that I get it so we've talked about you know the transportation side sackcloth the energy side that obviously is very big in that as well and it nicely jives with the Modi government's ambitions and targets for making renewables a much, much bigger portion of the energy mix. I think they've got one of the most ambitious progressive programs on the planet right now. So that's something that obviously can tap into and seize opportunity and but interestingly you also think in good old coal, coal fired power plants there's still life.
JR: Very much 40 per cent of the world's population gets their energy from coal fired power. That number is not going to change anytime soon in a significant way. So companies like ours are focused on how can you consume that coal in a more efficient more environmentally responsible way. You can't forget about it right. This is really important, really important to India, is really important to China. It's really important in a lot of places. And there are technologies which will allow you to use it more efficiently and more effectively.
MS: So clean coal could be a much more efficient sort of transition that technology before we get into a more, a more space age stuff. I get that, and GE's acquisition of all, some energy that's going to help with this transition.
JS: It's one of the things we love about the combination because the all star acquisition brought great technologies in and steam fired power generation which is, this is how you burn coal. Also the whole balance of plant all the other pieces of equipment that go into a large scale power plant a lot of that capability came with the awesome acquisition. So it's one of the reasons we love it.
MS: OK excellent John, listen. Great to talk to you, appreciate the time.