Mamata to Obama, a prize gift - Rail deals lined up that will create jobs in US

Mamata and Obama

US President Barack Obama, struggling to cope with worsening unemployment at home and under pressure to prevent outsourcing of work to India will receive an unexpected gift of a few thousand jobs for Americans from a surprising source when he is in New Delhi next month.

If all goes well, railway minister Mamata Banerjee would close deals during Obama’s stay in New Delhi, which would create jobs either in Erie, Pennsylvania or in LaGrange in Obama’s home state of Illinois.

And that is only a beginning. Negotiations now under way are expected to provide orders of up to $4.5 billion from Indian Railways in the next 10 years, of which a substantial share may go to Americans firms, aiding the US economy which under severe strain and promises to get worse.

The deals between the Indian Railways and American companies will not be a oneway street. Also next month, the railways will invite financial bids from six companies, including one from the US, which have been shortlisted for building a Rs 500crore coach factory in Kanchrapara in Bengal.

At least 3,000 jobs will be created when the new factory goes into production in Kanchrapara where more than 10,000 people are already employed in a railway workshop established in 1863.

America’s General Electric is also among four bidders which have been shortlisted for a Rs 860crore electrical engine components unit in Dankuni, also in Bengal.

The unit, aimed at import substitution, will supply components to the Chittaranjan Locomotive Works. The request for quotations for the project have already been completed.

But the prize deal which is exciting officials here preparing for the Obama visit is a proposed factory in Marhowra in Bihar to manufacture diesel locomotives.

Only two companies, ElectroMotive Diesel (EMD) and GE, both from the US, bid for the project with an initial investment of between Rs 1,200 and Rs 1,500 crores, according to Amit Mitra, chairman of an experts committee set up by the railway minister on publicprivatepartnership and innovative financing for the development of railways.

The Americans are excited because they will get the contract irrespective of which of these two companies is picked for this project, creating jobs in the US.

Unemployment has become Obama’s Achilles heel in the Congressional elections next month. If new jobs are not created here in the next one year, Obama may find it hard to be reelected for a second term as President.

Employment figures released yesterday revealed that a further 95,000 Americans became unemployed in September. The government shed 159,000 jobs last month, but it was offset by the creation of 64,000 private sector jobs, balancing the total job losses in a month at 95,000.

Ripple effect from the unemployment figures pushed the US dollar yesterday to its lowest level against the Japanese yen in 15 years.

A bigger challenge for Obama is the 2010 poverty census released here last month which showed that a shocking 14.3 per cent or one in seven Americans are now living below the poverty line.

Mitra, who is also secretarygeneral of the Federation of Indian Chambers of Commerce and Industry (FICCI), was here to work with Indian and US teams finalising Obama’s business agenda in Mumbai, Amritsar and New Delhi.

He also coordinated the seventh annual India Investment Forum in New York organised by Ficci and Euromoney magazine.

Anything that will add jobs in America will be seized upon by Obama and his delegation in India. Pennsylvania, Illinois and Ohio where EMD was founded in 1922 are reeling from the effects of the recent financial crisis and the expansion of the Indian Railways holds out prospects of increased US exports to India.

Yet another big railway project which the Obama team will have its eyes on is a factory to manufacture electric locomotives at Madhepura in Bihar. But GE has three other firms from outside the US to contend with in this bid.

The Madhepura project which requires an investment of just under Rs 1,300 crore will manufacture 120 electric locomotives a year. The railways are committed to buying these over a 10year period.

The new projects envisioned by Banerjee and examined by experts led by Mitra have the potential to mute constant American complaints about tardy imports by India which have led to a big trade imbalance favouring India.

In the preparations for Obama’s visit, India is already underlining the advantages for Americans from a growing economic partnership between New Delhi and Washington.