General Electric vice-chairman John Rice would like to see more discussion on modernising freight rail system. He says a lot of investment would be needed to modernize it.
On its deal with Alstom, Rice says it would be good for India. However, he is yet to decide on Alstom's India future - whether it will continue to stay listed in India or not.
Also Read: GE makes $389 m share tender offer for Alstom's India
He believes the new government must look at encouraging ease of doing business and reduce regulatory burden. He feels the Modi government will push through reforms. According to him, there is a need for clarity on gas prices as investments worth USD 10 billion are tied up by companies. He says: "It would be terrific if clarity on gas prices comes in 90 days." GE wants to make large investments in India's gas market. But the investment would be less if gas price is significantly lower than market price, he adds.
GE is also looking to expand its healthcare business.
Rice says GE is always on the lookout for potential acquisitions. It also plans to look at Indian JVs in power generation, oil and gas and healthcare sectors.
Below is the verbatim transcript of John Rice's interview with CNBC-TV18
Q: It is a very different India since the time we last had you on CNBC-TV18. We have a new government in place and this government is making all the right noises when it comes to taking the reform agenda forward. How confident are you feeling about the India story as a long time India investor?
A: We are encouraged and confident. The Prime Minister's track record doesn't need to be explained by me. The people that he has assembled around him are can do people and so we are very optimistic about the prospects for India. They are talking about investment, they are talking about infrastructure and those are things that we talk about.
Q: Speaking of GEs interest in India and as I pointed out GE has been a long time investor in India. You have stayed with the Indian economy through good times and bad but in the context of specific announcements that have come in from the government already – it's barely six weeks old but let me ask you about the Railway Budget in specific which was unveiled on Tuesday. The government has talked about foreign direct investment in railway infrastructure, has talked about promoting public private partnership which hasn't really taken off in the railways. How confident are you feeling about the railway story in India which is something that I know GE has been betting on for a very long time?
A: We would like to see in the Budget a little more discussion about modernising the existing freight rail system. We think that is also important in addition to new technologies like high speed rail. Those are relevant and important but they touch a smaller segment of the population. So, we would look for a little broader role for investment in rail that would include the traditional freight rail system which needs to be modernised and needs to be upgraded where we think we can play a role.
Q: Are you enthused because you talked about freight and yesterday the railway minister said that this government's target is to make India the largest freight carrier in the world. Does that enthuse you and if they were to lay out the specifics what kind of investments could we potentially be talking about?
A: Certainly several hundred million dollars. If you look at what it will take to fully modernise the freight rail system and do what the minister suggested which we think is important, at the end of the day freight has an enormous role to play and the movement of freight in India's economy and we think that is just going to grow in the years ahead. So, we support those comments and we think that there needs to be a form of investment and public private partnership around that. We are prepared to work with the government in that capacity and we would like to start tomorrow.
Q: The government has talked about inviting FDI, of course the matter is pending cabinet approval, not in railway operations but in railway infrastructure. The government also has big plans for bullet trains and a high speed railway network, so on and so forth, do you believe that foreign investors are going to be takers for this story?
A: I do. We have in the past over the last 10 years, we have demonstrated several times our willingness to be an investor in the rail modernisation programme here. For different reasons the projects did not move forward. We think the time is right, we think this is the government. We appreciate and support what the rail minister is saying and we want to be part of the process and we are prepared to be one of those investors.
Q: GE's global deal with Alstom will also result in ownership change of Alstom India and Alstom T&D, what is this going to now mean for GE's infrastructure story and infrastructure play in India with ownership change of both these Alstom companies?
A: We are still in the process of working through the details and it will take us six to nine months to be able to close this and get all the regulatory approvals and do everything we need to do to actually complete the deal but we are very optimistic. Alstom brings a very established presence in India, about 8000 employees, I think when we are done we will have over 20,000 employees in India, significant expansion of our manufacturing base here, some important joint ventures with important Indian companies. So, for us in India the combination of GE and Alstom gives us an even better foundation to work from.
Q: Share with us what you can specifically for the kind of opportunity that Alstom will give GE in power infrastructure, the power transmission space specifically. How confident are you feeling about that given the fact that this government is talking about power sector reforms and also big renewable energy push?
A: The government is talking about the need for reforms and we think this government will push through and make that happen. The awesome capabilities married with GE capabilities which we believe are very complementary give us a much better framework with which to support and push forward these reforms. So, in the context of what we do as a company and what the country needs and what the government wants private investors to do we think this is 1+1=3 combination.
Q: I don't know if you can share details with us or you have specifics worked out just yet but both listed entities in India, would you like to remain listed, would you like to take the delisting route once the transaction is complete?
A: We are still working through those details and over the coming months as the process for putting this transaction together takes place we will be able to talk in more detail about exactly what will happen and how it will happen.
Q: One of the reforms that seem to have gotten delayed even further is the reform related to aligning gas prices to market rates. The Rangarajan formula we talked about the last time, you were hopeful that the government would implement the new price regime for gas prices - that hasn't happened. It is likely to be at least another three months wait. Bob Dudley of BP has called the experience in India on gas pricing disappointing to say the least. How would you assess the current situation and do you believe that this has been a disappointment?
A: It is certainly important for this to be resolved. Depending on how you keep score there are tens of billions of dollars of investments that are tied up in this part of reform. The wait for clarity, BP is going to make big investments, Indian companies are going to make big investments, companies like GE will participate in our way and the government is talking about the need for foreign investment and talking about the need for infrastructure and this fits hand in glove with those needs. So, clarity and decision around gas pricing has never been more important. If it comes out in the next 90 days that would be terrific but it is very important that we get some resolution which gives investors the clarity they need to move forward with these important projects.
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