The strategy is being implemented through partnerships with global companies and under direct state leadership.
More broadly, support for manufacturing across sectors is a core pillar of Egypt’s new economic narrativ, which charts a path for the economy through 2030 with targets including raising real GDP growth to 7 percent and creating 1.5 million new jobs over the next five years.
The industrial shift
Kamel El-Wazir, Deputy Prime Minister for Industrial Development and Minister of Industry and Transport, recently announced that Egypt had entered a new phase in its industrial strategy.
The country no longer merely imports trains and metro cars but has begun manufacturing them domestically. He said the transport sector has become “one of the engines of economic development”.
Localizing strategic industries is central to Egypt’s broader economic agenda, aimed at meeting rising domestic demand, curbing the import bill and positioning the country as a competitive exporter. As part of this vision, the government is targeting an ambitious increase in export revenues, seeking to surpass $146 billion by 2030.
The minister stated that SEMAF, the local railway factory and part of the Arab Organization for Industrialization (AOI), has already begun manufacturing train cars and will soon start assembling high-speed train units, while NERIC is preparing to become a regional train-manufacturing hub. This coincides with new investment from Coleway, which has begun producing train and bus interiors in Egypt.
“We will not allow any serious project to be stalled, and we will offer industrial land at symbolic prices, or even free, to support genuine investors,” the minister said.
Local manufacturing of the high-speed electric Velaro train
The Ministry of Industry and Transport is also preparing to launch a new phase of international industrial co-operation by establishing a dedicated factory for domestic production of the high-speed electric Velaro train.
The project is considered one of the state’s most significant achievements in localising modern transport manufacturing and advancing its transition towards clean and sustainable technology.
The Velaro, powered by clean electric energy, represents a major upgrade to Egypt’s rail system and aligns with the state’s green transformation strategy and Vision 2030.
“The Velaro project embodies a new phase of industrial integration between Egypt and its international partners. The ministry is working on establishing a fully integrated factory to produce high-speed electric trains in the coming period, aiming to localize modern technology and transfer global expertise to local talent,” El-Wazir said during the sixth Smart Transport, Logistics, and Industry Exhibition and Conference.
Localization beyond manufacturing
Mona Nour El-Din, Professor of Economic Geography and Transport, stressed that localization should not be reduced to “increasing the percentage of local components” but should involve “creating a comprehensive production system,” including research and development, supply chain building and technical training.
“If we treat localization as merely a substitute for imports, we’ll stop at assembly. But if we want it as a tool to build a real productive economy, we must think in terms of industrial depth, not surface-level fixes,” she told Ahram Online.
Nour El-Din argued that transferring industrial knowledge is more important than simply attracting production lines, adding that Egypt could become a regional hub for train manufacturing if it invests seriously in local talent and technology.
El-Wazir noted that state-owned SEMAF has begun manufacturing metro and railway cars in preparation for assembling high-speed trains, and that the National Egyptian Railway Industries Company (NERIC) is positioned to become a regional train-manufacturing entity.
He also pointed to the entry of Coleway, which has started producing train interiors locally. Egypt, he said, “is no longer merely a transport importer, but a potential exporter”.
Promising opportunities, persistent challenges
Mohamed El-Bahy, board member of the Federation of Egyptian Industries (FEI), praised the government’s approach but warned against limiting localization to the state without genuine private-sector participation.
“The private sector has the expertise and flexibility, but it needs real incentives, such as tax exemptions, discounted land, and financing networks linked to production and export,” El-Bahy told Ahram Online.
He argued that localizing transport manufacturing could significantly reduce Egypt’s demand for foreign currency, as many components, including frames, rubber and glass, can be produced domestically, strengthening supply chains.
El-Bahy pointed to China’s experience: “China began by manufacturing frames locally and importing engines from Japan, then developed its industry to become one of the world’s largest exporters of heavy transport.”
Observers, meanwhile, note ongoing uncertainty around the legislative framework governing localization, particularly the absence of laws mandating preference for local products in major projects or defining oversight mechanisms for declared local component ratios.
In this context, El-Wazir said the state is working on establishing a “negative exhibition” to identify gaps between industrial needs and local market capabilities, in order to strengthen industrial integration and reduce imports.
Egypt’s location: An underutilized advantage
Nour El-Din argued that Egypt’s geographic location—connecting three continents—offers a genuine competitive advantage, but warned that this could be “wasted if it is not translated into real export policies”.
“We need a clear export map for transport products and logistics routes linking Egypt to target markets in Africa and the Middle East. Localization should lead us toward export, not just self-sufficiency,” she said, adding that the state should set quantitative and qualitative goals for “industrial security”, rather than merely raising assembly rates.
Knowledge transfer or assembly?
El-Bahy said attracting foreign companies such as Alstom and Siemens represents an important opportunity, but insisted that “technology transfer must be a fundamental condition in contracts, not a secondary option”.
“What’s the benefit of a foreign factory that doesn’t transfer its expertise? The most important thing is building internal capabilities in design, programming and testing, not remaining dependent on assembly lines without technological sovereignty,” he said.
He called for establishing a national centre for industrial knowledge transfer and documentation of all manufacturing stages to ensure continuity across generations.
Citing Morocco’s experience, he said: “When Morocco began manufacturing cars, it didn’t possess all the technology, but even workers’ wages were considered added value to the national economy.”
Nour El-Din agreed, saying “assembly is no longer sufficient; what’s needed is the transfer of industrial knowledge”.
She added that the state is working on activating international agreements to exchange expertise with experienced manufacturing nations, such as South Korea and Germany, noting existing partnerships in transport infrastructure and Build-Operate-Transfer (BOT) projects, as well as a growing trend towards privatising some operational and management services to encourage innovation and improve efficiency.
Local value added: The true measure of success
Nour El-Din said that evaluating localization should go beyond raising local component ratios to include “product quality, safety standards, and reliance on clean technology”.
She linked localization to reducing logistics costs, which account for more than 50 percent of final product prices. With road transport responsible for 98 percent of goods movement in Egypt, she said developing the industrial transport sector is “one of the keys to lowering prices and improving export competitiveness”.
El-Wazir reiterated: “We will not allow any serious project to be stalled, and we will offer industrial land at symbolic prices, or even free, to support genuine investors in this field.”
He confirmed that French multinational rail transport systems manufacturer Alstom has begun its initial manufacturing phase in Egypt, becoming the first factory of its kind in the Middle East specializing in communication and control systems for electric transport, a sign of global companies’ confidence in Egypt’s industrial environment.
According to the minister, localization rates for high-speed trains will start at 40 percent in the first batch, rise to 50 percent in the second and reach 70 percent in the third, in partnership with German multinational technology conglomerate Siemens.
Egyptian companies, he added, are now capable of producing key components such as air-conditioning systems, interiors and seating, enhancing industrial integration and reducing reliance on imports.
Industrial localization and green transport
Nour El-Din told Ahram Online that the state is focusing on high-tech transport industries, especially electric vehicles, noting that “this direction has become part of the strategy for transitioning toward a green economy”.
She said Egypt is well-positioned to become a regional hub for sustainable transport manufacturing thanks to its location and modern road network, and highlighted the importance of “localising battery and charging system manufacturing” as the next step.
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