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GE Vice Chairman John Rice: Why our India business is complicated

In India, GE has needed to take additional, sometimes extraordinary, steps to allow its business to grow, John Rice, the company's vice chairman, told CNBC.

"You really have to think about it like an ecosystem," he told "Street Signs" on Thursday, noting that an example of this was the infrastructure GE was creating to fulfill its $2.5 billion rail contract.

Investor sentiment toward India has improved since Narendra Modi's government came into power two years ago and introduced sweeping reforms that included opening up key sectors such as defense and aviation to foreign investors.

Late last year, GE announced it landed a contract to supply and maintain 1,000 locomotives for Indian Railways over 11 years, its largest-ever India deal. The U.S. manufacturing stalwart planned to invest as much as $500 million to build manufacturing and service facilities, including a locomotive manufacturing facility in Bihar state and maintenance sheds in Punjab and Gujarat states.

Rice said he expected the first locomotives to roll off the line in 2018, with additional efforts planned in 2019 to make more of its components locally. But thinking of the deal as merely building facilities was too simplistic, he noted.

"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," Rice said.

Not only did GE need to put in "wall-to-wall" training for its own employees and create relationships with local schools and institutions, it needed to train other parts of the workforce as well, he said.

Indranil Mukherjee | AFP | Getty Images

"We have to train an ecosystem too, because we need a supply base to support our requirements," Rice explained. "So we're training our employees, our suppliers' employees, because we want to build to that standard that will allow us to achieve our localization goals, but also export."

Additionally, the company needed to find ways to help its suppliers grow as well, he said.

"We work with banks to provide working capital for our supply base because they need money to invest in inventory to support our production requirements," Rice said.

GE has also advocated with the government to establish an export credit agency to help India-based manufacturers enter global markets, Rice said.

—Saheli Roy Choudhury contributed to this report.

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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1