Govt moves to allow 100% FDI in railways

The NDA government is moving fast to allow 100-per cent foreign direct investment in railways in order to upgrade infrastructure for freight and high-speed trains. The Department of Industrial Policy and Promotion (DIPP) under the commerce and industry ministry is reported to have circulated a draft cabinet note on the matter for inter-ministerial consultation

Reports say the move to allow 100-per cent FDI in select segments such as high-speed train systems, dedicated freight lines built through the public-private partnership route and in certain areas of suburban rail networks has now been extended to more areas.

Besides high-speed train systems and dedicated freight lines, the cabinet note proposes to allow foreign investment in suburban corridors and freight lines connecting ports, mines and power installations.

However, existing passenger and freight network operations will not be opened to foreign investors.

The DIPP is looking at all the areas in railways where FDI can be permitted so that Indian Railways can realise its full potential.

The railways is a critical sector for driving India's economic growth and has the potential to raise GDP by over one per cent.

Official sources point out that there is an urgent need to modernise, strengthen and expand the Indian railway network which would require larger investments than what the government can provide.

The Indian Railways needs funds to the tune of Rs5,00,000 lakh crore for modernisation, a large chunk of which will come from the private sector, according to Railway minister Sadanand Gowda.

High-speed trains and dedicated rail corridors are top on the agenda for the BJP government and the intention to upgrade infrastructure was officially announced in the president's address to the joint sitting of Parliament.

The BJP's election manifesto had also committed to modernise and upgrade railways and launch `diamond quadrilateral' project of high-speed train network.

"Railways is desperate for investment. It needs money for expansion. It needs money for safety. It needs money for modernization and for railways the quantum of investment that you need India cannot suffice, so FDI would be a very good opportunity," The Times of India quoted commerce and industry minister Nirmala Sitharaman as saying on Monday.