Set up in 1961 in technical collaboration with American Locomotive Company (ALCO) of USA for manufacture of diesel-electric locomotives. DLW has since then manufactured over 4500 locomotives. With a capacity of building 150 locomotives per year, DISEL locomotive works is today one of the world's largest diesel locomotive manufacturer outside North America.

In 1995, Indian Railways entered into an agreement with General Motors, USA for transfer of technology for manufacture of 4000 HP microprocessor controlled, fuel-efficient freight and passenger locomotives at Diesel Locomotive Works. Series production of 4000 HP WDG4 class heavy-duty freight locomotives and WDP4 class high-speed passenger locomotives with high-speed potential of 160 kmph has already started at Diesel Locomotive Works.

In addition to meeting the requirements of Indian Railways, DLW has been supplying locomotives to non-railway customers like port trust, steel plants, power plants and fertilizer plants. DLW built locomotives have also been successfully exported to Tanzania, Vietnam, Bangladesh, Sri Lanka, Myanmar and Malaysia, meeting diverse customer requirements.

Over 2000 components are manufactured in house at DLW. These include ALCO turbo superchargers, lubricating oil pumps, water pumps, camshafts, cylinder heads, chrome plated cylinder liners, connecting rods and various gears. Its well equipped machine shops have dedicated lines for operations like turning, milling, gear hobbing, drilling, grinding and planning etc., in addition. DLW is equipped with a variety of special purpose machines and a large number of state-of-the-art CNC machines to ensure quality and precision. All related processes like heat treatment and induction hardening are also carried out in-house. A completely new chrome plating shop for cylinder liners has been set up with modern infrastructure like fume extraction system and programmable logic controlled material movement system.

DLW has also successfully diversified into the field of manufacture of Diesel Generating (DG) sets of capacities up to 2.5 MW. More than 40 DG sets have been supplied to various customers including atomic power plants. DLW has been a pioneer in setting up quality and environment management systems on Indian Railways and is certified with ISO 9001:2000 as well as ISO 14001:1996 standards. It has also now diversified into high powers DG sets of 2-2.5 MW range. These DG sets have micro-processor controlled governor, turbine motor air starter, solid state protection relays micro-processor based control and diagnostic system. These sets are capable of automatic start-up with in 10 seconds of power failure and have a frequency variation within plus minus three per cent and voltage dip of 15 per cent and have been provided with the most modern state-of-the-art alternator with brushless type excitation system and automatic voltage regulators. Diesel Locomotive Works has supplied twelve DG sets having micro-processor control with fault diagnostic system to Nuclear Power Corporation of India. These sets are custom designed to stringent requirements.

Manufacturing activities at DLW are broadly divided into two major divisions: the Engine Division and the Vehicle Division. Machine Maintenance Division and Tooling Division directly support these manufacturing divisions. In house infrastructure of Design and Development wing, Laboratories, Production Planning wing and Materials Management wing make it is a self-contained heavy engineering plant. It has a well-laid out factory, which permits uniform flow of materials, sub-assemblies and assemblies from one stage of manufacture to the next. Separate areas are clearly demarcated for Engine and Vehicle manufacturing.

Large special purpose machines are utilized for machining cast and fabricated bogie frames. In the same work area, axle and wheel disc machining is undertaken on sophisticated CNC machines. Inner diameter of wheel disc are carefully machined with the outer diameter of axles before the wheel discs are pressed onto axles, at designated pressure, using a specially designed wheel press. The complete bogie, including bogie frames, wheels and axles, brake rigging and traction motors is assembled before being sent onwards for locomotive assembly. Precision cutting and forming of sheet metal is utilised for manufacturing of superstructures including driver's cab, engine hoods and compartments for housing electrical equipments.

Quality has been a crusade in DLW since its very inception. Modern instrumentation and machinery help the workmen in maintaining a high standard of quality. Under ISO 9002 certification scheme, all its jigs and fixtures, tools and gauges are calibrated regularly according to a carefully worked out plan. To supplement the rigorous standards of certification for DWL's vendors, almost all bought-out items are subjected to quality checks and are certified by incoming inspection. DLW is the proud owner of ISO 9002w certificate for the entire manufacturing activities.