The plant – a 50:50 joint venture project between Indian Railways (IR) and the state of Karnataka – will have capacity to build 500 coaches per year.

The decision to set up the facility at Kolar comes just a few months after the announcement of plans to set up another coach factory at Palaghat in the state of Kerala, and is part of IR's plans to modernise its coach by the end of the current five-year planning period in 2016-17.

IR has a fleet of around 52,000 coaches and aims to manufacture an additional 43,968 vehicles by 2020.

The so-called Linke-Hoffman Busch (LHB) coaches favoured by IR are mainly manufactured at the Kapurthala-based Rail Coach Factory (RCF), but other production units including the Integrated Coach Factory (ICF) at Chennai have started to migrate to LHB technology.

The ICF manufactured 50 LHB coaches in 2012-13, but has set for itself a target to manufacture 300 LHB coaches in 2014-15 and 1000 coaches in 2016-17.

LHB production capacity at RCF is expected to increase from 750 vehicles per year to 1200 in 2014-15 and 1500 in 2016-17. Overall, 4000 LHB coaches will be manufactured annually by the railway production units.

IR acquired the LHB technology through two separate agreements with Alstom LHB in 1995 – one for the supply of 24 EOG coaches; the other for the transfer of technology for their production at RCF.

Other EOG variants of the LHB design coaches have since been developed.