It was set up in the year 1985 with an investment of ₹423 crore (US$342 million) in order to enhance production capacity for India's railways and generate employment for the youth of the state.

[5][1] The unit is located on the Jalandhar-Firozpur railway line, and currently, has the job of manufacturing new LHB and MEMU coaches.

[4] The foundation stone for Rail Coach Factory was laid by then Prime Minister of India Rajiv Gandhi on 17 August 1985 with an initial cost of ₹423 crore (US$49 million).

[4] The factory, in association with DRDE, has also developed a highly cost-effective indigenous technology for the treatment of biowaste in coaches.

[8] During FY 2015-16, the factory manufactured 120 LHB coaches to be exported to Bangladesh at an estimated cost of ₹367 crore (US$42 million), with the first consignment of 40 sets dispatched in March 2016.