Before General Elections, the Government seems to be trying its best to bring in reforms by allowing more foreign direct investment in some crucial sectors like railways and planning to move revised Cabinet note soon.
Department of industrial policy and promotion (DIPP) has been pushing for allowing FDI in railways since August last year. The Government is also keen to have it passed before the elections. By the final Cabinet note, India will allow foreign players to invest only in construction and maintenance of railway projects, not in operations.
“Yes we will soon float a Cabinet note on FDI in railways,” Commerce & Industry Minister Anand Sharma told The Pioneer. “We are also considering liberalising the construction sector further and allowing FDI in the realty sector,” he added.
The final Cabinet note is to propose that up to 100 per cent FDI should be allowed in dedicated freight corridors and high-speed railway networks falling under the fixed-line category. And, up to 74 per cent should be allowed in the case of collaborations and joint ventures in other areas.
“DIPP has revised the comments of the Home Ministry and Cabinet will take decision later this month,” said sources close to the development. The Railways Ministry is also seemed to be keen in getting FDI, especially in public-private partnership (PPP) projects. This is because domestic private players have shown little interest in this segment.
The move will also help the railways achieve its revenue target of Rs 60,000 crore through projects like construction of factories to manufacture locomotives and coaches. According to DIPP statistics, foreign equity flows in railway-related components between April 2000 and September 2013 stood at $368 million.
Earlier Home Ministry and the department of economic affairs have sounded a note of caution, citing “security” concerns, especially with regard to investments from China in this sensitive sector. The vast network of railways is therefore, in desperate need of more funds. India has the world’s fifth largest railway network, after US, Russia, Canada and China.