The 100 per cent foreign direct investment (FDI) in railways, approved by the Union Cabinet on Wednesday, will not be allowed in train operations, the government clarified on Thursday.
“As far as the operations part is concerned, certainly we are not allowing FDI. It is only in infrastructure and other areas,” Railway Minister D.V. Sadananda Gowda told newspersons outside Parliament House on Thursday.
Senior railway officials pointed out that the operations area had security and safety implications. During the Kargil War, the Railways cancelled 300 trains to transport troops and ammunition, without the general public knowing about it. They also said tampering of even one track circuit on a heavily saturated route would back up trains for kilometres and cause major disruptions to the economy.
“If we give operations to private players with foreign equity in running trains, many of the things we do confidentially and without making a noise will be known to others,” an official said while pointing out that the running of Mil-Rail, or special military trains, for transporting troops and even heavy equipment such as tanks and artillery guns is an integral part of railway operations.
With the Railways not having a very good track record in attracting private investment, Mr. Gowda said only time would tell whether it would be able to attract foreign investment.
On the other hand, according to a source, in the defence sector, the Cabinet had approved 14 changes to the existing policy while hiking the limit to 49 per cent.
Defence sector
The government, however, strongly defended the 14 amendments made while hiking the FDI limit for defence from 26 per cent to 49 per cent, saying that the existing regime had made it the “least attractive sector” for foreign investors even though India was among the world’s top 10 countries in terms of military expenditure. The government also sees a multiplier effect to the economy because defence has strong inter-sectoral links with automotive, precision engineering, electronics and machine tools.
