India’s dream of acquiring a bullet train has got a boost with Japan offering to finance the first such $15 billion venture at an interest rate of less than one per cent.
Japan is engaged in assessing the feasibility of building the 505-kilometre corridor linking Mumbai with Ahmedabad. The study has reportedly found that the project would be technically and financially viable.
The project to build and supply the route will be put out to tender, but offering finance makes Japan the clear frontrunner.
last month, China won the contract to assess the feasibility of a high-speed train between Delhi and Mumbai, a 1,200-km route estimated to cost twice as much. No loan has yet been offered.
Japan’s decision to give virtually free finance for Modi’s pet programme is part of its broader pushback against China’s involvement in infrastructure development in South Asia over the past several years.
“There are several (players) offering the high-speed technology. But for technology and funding together, we only have one offer. That is the Japanese,” said AK Mittal, the Chairman of the Indian Railway Board, which manages the network.
The two projects are part of a ‘Diamond Quadrilateral’ of high-speed trains over 10,000 km of track that India wants to set up connecting Delhi, Mumbai, Chennai and Kolkata.
Japan has offered to meet 80 per cent of the Mumbai-Ahmedabad project cost, on the condition that India buys 30 per cent of the equipment, including the coaches and locomotives from Japanese firms, officials said.
Japan’s International Cooperation Agency, which led the feasibility survey, said the journey time between Mumbai and Ahmedabad would be cut to two hours from seven. The route will require 11 new tunnels including one undersea near Mumbai.
“What complicates the process is Japanese linking funding to use of their technology. There must be tech transfer,” said Mittal.