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Spain’s Talgo keen to jump aboard India’s extensive rail plans

NEW DELHI — Spanish train-maker Talgo SA sees an opportunity in India’s tense relationship with China.

India’s government is pursuing railway modernisation with a S$180 billion upgrade. Photo: Reuters

India’s government is pursuing railway modernisation with a S$180 billion upgrade. Photo: Reuters

NEW DELHI — Spanish train-maker Talgo SA sees an opportunity in India’s tense relationship with China.

Companies such as Talgo, Germany’s Siemens AG and France’s Alstom SA face stiff competition for global train deals from Chinese state-run giant China Railway Rolling Stock Corp (CRRC). Their chances may be better in India, where border and naval rivalries with the communist nation are weighing on bilateral ties.

“We’re open to any possible approach, partnership or projects related to the construction and maintenance of train technology in India,” Mr Jose Maria Oriol Fabra, chief executive at Talgo, said in an interview. The spats between India and China give Talgo an advantage over CRRC as India’s government pursues a railway modernisation drive, he said.

Mr Fabra said he would like to manufacture and export from India to compete with Chinese trains on price rather than technology alone. He was speaking during a trip to promote his products as Prime Minister Narendra Modi seeks a US$132 billion (S$180 billion) upgrade of the nation’s congested network. The question is where Mr Modi will find all the money, as an effort to woo foreign investment fizzles.

“India will take time to mature, to take decisions but we are pretty sure that this market will explode,” said Mr Fabra in the July 22 interview. “We need to produce in India.”

Madrid-based Talgo, which specialises in higher-speed trains, plans to bring one to the South Asian nation in the next few months to showcase its capabilities. Mr Fabra counts Asia as the top market for growth potential.

India has identified nine corridors for trains with speeds of as much as 160kmh to 200kmh.

Other companies are looking at Indian opportunities too, such as Knorr-Bremse AG, which says it is the top maker of braking systems for rail and commercial vehicles. Railroads globally may need US$5 trillion of investment by 2030, the International Union of Railways estimates.

Talgo’s shares are down about 34 per cent since an initial public offering in May. The company reported a net income of 23.5 million euros (S$35 million) in the first six months of 2015, a 57 per cent rise on a year earlier. Mr Fabra said Talgo’s technology can boost speeds on existing tracks. Its trains run in Spain, Portugal, France, Switzerland, Italy, the US, Kazakhstan and Uzbekistan, according to the company’s website. In July, it said Saudi Railways Organisation cancelled a US$201 million contract for six passenger trains.

State-controlled Indian Railways aims to invest 8.5 trillion rupees in Asia’s oldest network through 2020. Mr Modi is trying to reverse under-investment and reduce congestion. The government is considering setting up a fund to get nearer the target, with the World Bank and private institutions among possible contributors. “The message I got from different operators I met is they really want to invest,” said Mr Fabra. BLOOMBERG

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