The shortlist includes Bombardier-Siemens, Alstom-CRRC, Stadler-Medha, and the state-owned Bharat Heavy Electricals Limited (BHEL).

The project will adopt a financial model similar to the contracts agreed with GE and Alstom last year for diesel and electric locomotive factories at Madhepura and Marhoura.

The agreement will entail an “assured off-take” clause for a total supply of 5000 multiple unit vehicles annually over a 10-year at a rate of a 500 cars per year.

The contract – expected to be signed early next year – will have a price variation clause to protect the manufacturer from market volatility and will not commit the vendor to a technology transfer.

The chosen supplier set up set up a new joint venture company with IR holding a 26% stake. IR will provide 150 acres of land free-of-charge to build the factory, and will also provide land for two new depots.

The initiative is part of the government’s “Mission Raftaar” (Mission Speed) plans which aim to modernise and accelerate passenger services on short and medium-distance routes.