Indian Railways will need to review its accounting standards before it can expect private sector to come and invest in rail project in a big way.


This is a feeling of the industry which has given a cautious thumbs down to the Union Railway Minister’s proposal to open up the sector to foreign direct investment (FDI). Retired railway officials too felt that when retail FDI had not been a runaway success for companies entering the Indian market, it was doubtful if long gestation railway projects would see foreign investors trooping in with their capital.

“I am curious about how the Minister intends to rope in private sector participation” said Hemant Kanoria, Chairman and Managing Director, Srei Infrastructure Finance, adding that just opening up this sector to FDI and wishing for private sector participation might not be enough.”

He also felt that accounting standards of railways might need to be relooked at to make way for private sector.

Vishwas Udgirkar, senior director, Deloitte Touche Tohmatsu, said that it was important to point out that PPP had been part of the railway agenda for years.

However, during the period where India had developed one of the largest PPP programs in the world, the performance of railways in giving out PPP projects had been dismal.

Railways has approached PPP as a resource generation model but unless there was a significant shift in the approach of railways it was unlikely that PPP projects would seek much traction. Clear success of some high-profile PPP projects in the railways might lay the groundwork for projects in future, he said. 

It is doubtful if long gestation railway projects will see foreign investors trooping in with their capital