The government has notified foreign direct investment (FDI) norms for the railways a day after it did the same for the defence sector.
The two notifications come just before Prime Minister Narendra Modi embarks for a visit to Japan after which he is scheduled to interact with the leaderships of the U.S. and China. India is expecting a substantial chunk of foreign investment in the defence and railways sectors to come from the U.S. and in railways from China and Japan.
The notification permits 100 per cent foreign direct investment through automatic route in several areas, including high speed trains. The first high speed train is expected to run between Ahmedabad and Mumbai at an estimated cost of Rs. 60,000 crores to 70,000 crores.
But proposals involving FDI over 49 per cent in “sensitive areas, from security point of view” will be placed before the Cabinet Committee on Security (CCS) for approval on a case-to-case basis.
Both China, whose President Xi Jinping is scheduled to visit India later in the year, and Japan, whose Prime Minister Shinzo Abe will meet Mr. Modi next week in Tokyo, are keen on the high speed train contract. However, Indian Railways facing a cash crunch of about Rs. 30,000 crores to complete pending projects is expecting foreign funds on easy repayment terms for several segments.
Besides high speed trains, including full train sets, the notification also lists other areas where FDI will be allowed such as suburban corridor projects, dedicated freight lines, rolling stock, track electrification,
signalling, freight and passenger terminals and infrastructure such as railway sidings.
The proposal for inviting FDI in railways was mooted in the United Progressive Alliance’s railway budget presented by then Railway Minister Mallikarjun Kharge in February this year but amplified by the new Government when Sadanand Gowda presented the railway budget in June.
