Image copyright Getty Images Image caption India's railways are old and overcrowded

General Electric has won a $2.6bn (£1.7bn) contract from the Indian government to help modernise the country's railway system.

The US-based industrial firm said it would supply India with 1,000 diesel locomotives over the next 11 years.

The deal includes a $200m investment by GE to build new plants and warehouses.

GE chief executive Jeff Immelt said: "This infrastructure project is further evidence of India's position as a growth engine for Asia."

The agreement is the largest that GE has reached with the Indian government in the 113 years that the company has operated in the country.

The Indian government has been taking steps to improve the country's railways which are old and overcrowded. The country plans to spend $137bn over the next five years to modernise the system.

The plan is part of Indian Prime Minister Narendra Modi's Make in India scheme. The programme is intended to attract foreign investment to boost manufacturing in India.

GE has agreed to set up a manufacturing plant in the Marhowra district in the Indian state of Bihar, along with maintenance sheds in Punjab and Gujarat.