The union government, putting codicils to its move to allow foreign direct investment in Indian Railways, will restrict FDI for projects in "sensitive areas", where proposals seeking overseas investments beyond 49 per cent must be cleared by the Cabinet Committee on Security.
Earlier this month, the government had cleared the long-delayed proposal for relaxing the FDI policy for the cash-starved Indian Railways.
According to an NDTV report, the home ministry had raised concerns about opening up the rail infrastructure in border areas. To deal with the security related issues in the ''sensitive'' border and tribal areas, FDI proposals beyond 49 per cent will be cleared by the Cabinet Committee on Security (CCS).
In all other areas such as high-speed train systems, suburban corridors and dedicated freight-line projects, 100 per cent FDI is now allowed through the automatic route.
Foreign investment liberalisation in the sector is aimed at helping in modernisation and expansion of the rail projects.
However, FDI will not be allowed in train operations and safety.
According to estimates, the sector is facing a cash crunch of around Rs29,000 crore; and allowing of FDI will help mop up resources.
With the FDI nod, projects like the Mumbai-Ahmedabad high speed rail corridor are expected to get a push, as is the construction of exclusive rail corridors for freight movement.