Japan to fund mass rapid transit systems in Gujarat, Haryana

$4.5 billion soft loan from Japan International Cooperation Agency to boost $100 bn Delhi-Mumbai Industrial Corridor project.

September 23, 2017 09:46 pm | Updated 11:57 pm IST

Leg-up:  A model of projects on the Delhi-Mumbai Industrial Corridor, which spans six States.

Leg-up: A model of projects on the Delhi-Mumbai Industrial Corridor, which spans six States.

Funds from a Japanese government loan will soon be utilised for the first time in the $100 billion, Delhi-Mumbai Industrial Corridor (DMIC) project. So far, the mega-project was being developed only with the Indian government’s financial assistance.

The DMIC spans six States (Uttar Pradesh, Delhi National Capital Region, Haryana, Rajasthan, Gujarat and Maharashtra). It uses ‘the 1,500-km-long, high-capacity western Dedicated Railway Freight Corridor (DFC) as the backbone’ and aims to be ‘a global manufacturing and investment destination’.

Several rail links

A soft loan (with concessional conditions) to the tune of $4.5 billion to be extended by the Japan International Cooperation Agency (JICA), will shortly be utilised to develop two Mass Rapid Transit Systems (MRTS) — one each in Gujarat and Haryana — that will be part of the DMIC, official sources told The Hindu .

The JICA is the Japanese governmental agency in charge of implementation of Japan’s Official Development Assistance (ODA) — with the main objective of ‘promoting economic development and welfare in developing countries. The interest rate of the loan (in Japanese Yen) will be kept ‘very low’ (at 0.1%) and have a ‘long’ repayment period (at 40 years, including a 10-year grace period).

According to JICA, its “ODA to India started in 1958” and so far around “₹2.75 lakh crore in ODA loans have been committed for development across various sectors.” As per JICA, it is “India’s biggest bilateral donor.”

Incidentally, a JICA loan worth ₹88,000 crore, on similar terms , will be used to build the ₹1.08 lakh crore Ahmedabad-Mumbai bullet train project. JICA loans/assistance are being used to facilitate development of Metro rail networks including in Delhi and the Western DFC. The MRTS in Gujarat will be ‘at grade’ (ground level) and link Ahmedabad to the Dholera Special Investment Region (DSIR).

The sources said the Detailed Project Report (DPR) for the MRTS was ready and land was being acquired. The MRTS in Haryana will be an ‘elevated’ one and will connect Gurgaon and Bawal (part of the Manesar-Bawal Investment Region in the DMIC).

The land has been acquired and the DPR has been finalised, officials said, adding that the MRTS has been included in the JICA ‘Rolling Plan’ for the ODA loan. The Department of Economic Affairs will soon ask JICA to work on preparatory surveys for the project, they said. The length of these two MRTS projects will be 85 km each.


According to the Commerce and Industry Ministry (the nodal body for industrial corridors), the financial assistance for the DMIC project is to be in the form of grant-in-aid worth ₹17,500 crore — as a ‘revolving fund’.

This, it said, was for the development of ‘trunk infrastructure’ in the proposed seven industrial cities in the DMIC at ₹2,500 crore per city on an average, subject to a ceiling of ₹3000 crore per city.

In September 2011, the Union Cabinet — in addition to giving approval for ₹17,500 crore as ‘Project Implementation Fund’ — had also okayed an additional corpus of ₹1000 Crore as grant-in-aid to carry out project development activities. The funds are released to the Special Purpose Vehicles (SPVs) formed between the Centre and the respective State Governments. Official sources said, out of all this, the total amount spent till September 2017 was around ₹3,500 crore.

As per the ministry, the Japanese government had announced financial support for the DMIC project to an extent of $4.5 billion in the first phase — for projects with Japanese participation through a mix of JICA and Japan Bank for International Cooperation (JBIC) lending. Also, the JBIC currently holds 26% equity in the DMIC Development Corporation (the SPV which is the DMIC’s project development agency) aggregating to ₹26 crore. The Indian government holds 49% equity in the DMICDC, while the remaining is held by HUDCO (19.9%), IIFCL (4.1%) and LIC (1%).

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