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Government readying to open up some railway segments to FDI

Friday, 10 January 2014 - 11:14am IST | Place: New Delhi | Agency: DNA
Network addition, locomotive factories and dedicated freight corridors are among the areas that may see foreign direct investment.

The upcoming Mumbai-Ahmedabad corridor is likely to be the first high-speed railway line in the country to get foreign direct investment (FDI).

The government is likely to give a green signal to FDI in railways in the coming weeks. The commerce ministry is finalising a proposal to be submitted to the Cabinet for allowing foreign funding in certain segments of railways.

Network addition, investment in locomotive factories and dedicated freight corridors are among the probable areas that may see FDI. 

A senior railway ministry said, “FDI will be permitted in the railways’ infrastructure projects, laying of tracks and bullet-train projects. The Mumbai-Ahmedabad high-speed train corridor is likely to be the first one to get FDI in railways. But FDI won’t be permitted in core railway areas like inter-city passenger services, regular freight operations and safety- and security-related projects.”

The railway ministry is looking forward to FDI in the Mumbai-Ahmedabad project as it entails investment of Rs 60,000 crore, which is difficult for the railways alone to arrange.

As of now, both the Japan International Cooperation Agency (JICA) and French Railways are carrying out studies on the project. “JICA is researching on the technology and traffic-related aspects while French Railways is working on business projections,” said the official.

Both are likely to submit the reports in about a year.

Apart from high-speed trains, locomotive factories, dedicated freight corridors and suburban networks may be opened up to FDI via public-private partnerships or PPP, according to the Department of Industrial Policy and Promotion (DIPP) in the commerce ministry.

The DIPP has also proposed relaxation of FDI norms in real estate and e-commerce.

With the FDI move, the government hopes to get investments from German and US companies which have already evinced a lot of interest in locomotive projects.

So far, such projects could not take off due to lack of a model policy to award projects on PPP basis. India inherited about 55,000 km network at the time of Independence but could add only a little over 10,000 km since then. As per the Vision 2020 document for Indian Railways submitted to Parliament in 2009, Railways requires Rs 14 lakh crore investment annually for infrastructure facelift. 

In July last year, the government relaxed FDI norms in telecom, state-backed oil refineries, defence, power, stock exchanges and commodity bourses. Commerce minister Anand Sharma will meet finance minister P Chidambaram shortly to focus on FDI nitty-gritty. — with inputs from Reuters

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