Government-owned Rashtriya Ispat Nigam Ltd (RINL) has signed a memorandum of understanding (MoU) with national transporter Indian Railways to set up a forged wheel factory at Rai Bareli in Uttar Pradesh.

The factory, which is scheduled to be completed in around three years at a cost of Rs 1,000 crore, will be the biggest such plant in India. It will have an annual production capacity of 100,000 wheels.

After signing the MoU, Railway Minister Pawan Bansal said that the proposed plant would be built near the Lalgunj, Rae Bareli-based existing Rail Coach Factory.

Mr. Bansal added that the new wheel manufacturing facility would reduce the railways' dependence on imports. Currently, Indian Railways imports wheels worth Rs 350 crore per year.

In addition, the upcoming factory will generate more than 500 jobs. Steel Minister Beni Prasad Verma said, "It will provide an employment of 500 to 600."

Indian Railways require around 70,000 wheels per year. More than 70 per cent of the total demand is met via imports, at a cost of nearly Rs 70,000 per wheel.

The demand for wheels will jump to an estimated of one lakh by 2016-17 as the government has plans to put more coaches into service in the coming years.

Indian Railways also penned down a contract with NMDC for doubling the 150-kilometer rail line between Kirandul and Jagadalpur in Chhattisgarh. The entire cost of Rs 826 crore will be borne by the state-run miner.