Photographer: Dhiraj Singh/Bloomberg

GE Says Upending $2.5 Billion Rail Deal Risks Jobs in India

General Electric Co. said if Indian officials walk away from a multibillion-dollar locomotive contract, the move would damage efforts to create jobs and chill foreign investment.

Altering the deal would “undermine one of the most promising infrastructure projects in the country,” GE said Tuesday by email. India may also be on the hook for “substantial fees associated with this project,” the company said.

The pointed comments underscored the stakes of possible changes to the 2015 agreement, which called for GE to establish a factory in Bihar and build 1,000 diesel locomotives for Indian Railways. The roughly $2.5 billion contract marked a major victory for GE Transportation, which has been struggling recently with a downturn in the market.

The partnership is in question following recent comments from Piyush Goyal, the country’s new railways minister, suggesting that India would move away from diesel locomotives in favor of electric ones, which GE doesn’t make. The situation is under review and no decision has been made, a rails ministry official said.

GE Vice Chairman John Rice plans to meet with Indian officials on Wednesday. The Boston-based manufacturer said it expects the contract to move forward.

GE fell 0.7 percent to $24.93 a share at 2:48 p.m. in New York. The shares declined 21 percent this year through Monday, while the S&P 500 Index rose 12 percent.

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