In an important policy move that could be a game-changer in modernizing and bolstering the rail infrastructure, the Indian government has hinted at permitting 100% foreign direct investment (FDI) in railways.
The policy decision has not been formally announced yet. The Department of Industrial Policy and Promotion (DIPP) has moved a cabinet note to create structural and institutional changes necessary to ease the process of bringing in FDI.
According to reports, all the sectors of the railways barring ‘rail operations’ could receive 100% FDI. The Ministry of Commerce and Industry has started the process of relaxing foreign investment norms in the railways by allowing 100% FDI in sectors such as high speed train systems, dedicated freight lines and sub-urban corridors and freight lines connecting ports, mines and power installations.
The new FDI policy will also address key issues such as existing irregularities and inconsistencies plaguing the Indian Railways besides bringing in investments for locomotive manufacturing, building world class railway stations and the elevated rail corridor at Mumbai.
A policy statement on the subject is likely to be made by Railway Minister Sadanand Gowda in his rail budget speech on July 8.
The Indian Railways does not allow foreign investments at present. However, several rail connectivity routes such as Mundra, Pipavav, Kandla and Mangalore have been commissioned through private and joint venture routes. There is a provision for generating about around 16 billion USD through public private partnership (PPP) mode in the 12th five year plan. The Indian Railways has been pursuing private and foreign funds for specific projects such as the electric locomotive factories at Madhepura and Marhaura .
India’s Prime Minister Narendra Modi has made the modernization and renovation of railways a top priority of his government. The government also wants to build a network of freight corridors and Diamond Quadrilateral project of high- speed trains in the next few years which call for heavy capital investments.
“We will work towards developing the railways with priorities to metros and major cities. It is not difficult to make railway stations better than airports. It is economically viable to develop these projects and will attract private investments which will be a win-win situation,” Modi said in while flagging off Vaishno Devi Express and inaugurated the Udhampur-Katra rail link. The much awaited rail link is a part of the 292 kilometre Udhampur- Srinagar-Baramulla railway line, which would connect Kashmir with rest of the country.
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