In a major decision to boost Railway infrastructure and add quality passenger amenities, the Centre on Wednesday opened several sectors within the Indian Railways for foreign direct investment (FDI). liberalizing the FDI norms, it permitted 100 per cent FDI through the automatic route in an array of areas, including bullet and high-speed trains.
A detailed note on the notification issued by the Department of Industrial Policy and Promotion (DIPP) said the Government will allow the entry of 100 per cent foreign capital into the creation of railways infrastructure, operations and management.
The note pointed out that FDI is still prohibited in the Railway transport segment apart from mass rapid transport system. Currently, the cash-strapped Railways cannot fund these projects without private participation. Foreign capital in Railways was not allowed till now, however, the Narendra Modi Government has been pushing for it to build infrastructure projects such as high-speed railways and Railway lines to and from coal mines and ports. last-mile connectivity to boost business activity in and around ports and mines has been proposed through formation of special purpose vehicle (SPV) companies under the PPP model.
To introduce high-speed railways, the Railways have already expedited the process by conducting two high level meetings during the last
fortnight, asking the DRMs to prepare a detailed project report and also an agreement with Czech Railways in this regard. Other segments of the Railways in which FDI will be allowed include suburban corridor projects through PPP, dedicated freight lines, rolling stock including train sets, locomotives/coaches manufacturing and maintenance facilities, railway electrification, signalling systems, freight terminals, passenger terminals and infrastructure in industrial parks like railway line/sidings.
However, proposals involving FDI beyond 49 per cent in sensitive areas, from security point of view, will be placed before the Cabinet Committee on Security (CCS) for approval by the Railway Ministry on a case-to-case basis, DIPP said.
Further, definitions of “infrastructure” and “common facilities” have also been widened to include railway line/sidings (electrified railway lines and connectivity to the main railway line).The FDI liberalisation in the sector would help in modernisation and expansion of railway projects.However, FDI will not be allowed in train operations and safety. Earlier, FDI was allowed only in MRT systems.
According to estimates, the identified Railways sector is facing a cash crunch of around `29,000 crore and allowing of FDI will help adding on resources. Official sources said that foreign players from Japan and China are keen to participate in building up of the infrastructure.
The Cabinet early this month had approved a proposal which sought to allow FDI participation in erecting projects relating to electrification, high-speed tracks and suburban corridors.
These segments to get 100% FDI
High-speed corridors, dedicated freight lines, train coaches and locomotives
Passenger terminals and infrastructure in industrial parks like railway line/sidings.
Bullet train, other high-speed trains
Ports and mining areas connectivity through Special Purpose Vehicle model
Japan, China and Czech keen on high speed trains/corridors
FDI policy re-defines “infrastructure” and “common facilities”