BackGovt outlines areas open for FDI in railways
Railway ministry identifies 38 specific projects which could attract FDI worth `90,000 crore
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New Delhi: The Union railway ministry on Tuesday outlined areas open for private and foreign direct investment (FDI) and specified guidelines for the same, besides identifying 38 specific projects which could attract FDI worth ₹ 90,000 crore.
The notification on the railway ministry website comes a day after Suresh Prabhu took charge as Union railway minister.
Some of the key projects open for FDI include a ₹ 63,180-crore Mumbai-Ahmedabad high-speed corridor, a ₹ 14,000-crore Mumbai CST-Panvel suburban corridor and a ₹ 1,200 crore coach manufacturing factory at Kanchrapara in West Bengal.
The ministry listed 17 areas for private and foreign investment, including suburban corridor projects, high-speed train projects, freight lines, rolling stock manufacture, electrification, signalling, freight terminals and logistics parks, passenger terminals, training institutes, testing facilities, branch lines and hill railways, non-conventional energy, mechanized laundry, rolling stock procurement, bio-toilets, level crossings solutions and safety solutions.
Soon after assuming office, Prabhu told the members of the railway board that expediting projects would be his focus.
The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government allowed 100% FDI in railway infrastructure via the so-called automatic route on 6 August. Investment channelled through this route doesn’t require prior government approvals.
“During the time between the cabinet decision and this notification, new areas have been identified for FDI. So, from 10 areas earlier, now we have listed 17 areas," said a government official, who did not want to be identified.
A press release issued by the government after the 6 August cabinet decision said that FDI would be barred in core railway operations. Tuesday’s guidelines clarified that developers would be allowed to operate stand-alone projects under identified areas where there is no interference with the existing indian railways network.
The guidelines also do away with the administrative approvals previously required for railways manufacturing. “No administrative approval of MoR (ministry of railways) required in cases where no procurement commitment is made by MoR and no land lease from IR (indian railways) is involved," the guidelines said.
India has struggled to encourage private investment in its railways. The government revised its policy for private investment by issuing five participative models for rail-connectivity and capacity augmentation in a bid to attract investors in December 2012. Experts say even these models have seen limited success and attracting foreign investment could be equally challenging.
“The guidelines give a long list of avenues where FDI can come in. These are just possibilities. However, railways will have to create suitable projects with robust returns and risk-adjusted frameworks that are acceptable to investors," said Abhaya Agarwal, a partner at EY, who oversees the infrastructure practice at the audit and consulting firm.
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