Sunday, January 12, 2014

FDI in Railways – Some new Developments

As elections are approaching, GoI is in an extraordinary hurry to do some work. It is interesting to note this development; after all UPA government got one full decade for policy development and execution, which could have helped them in facing the coming elections confidently. Even though it’s late, GoI is opening new sectors for FDI. Opening railways is indeed a good development.

According to Business Standard, ‘As per final cabinet note, India will allow foreign players to invest… only in construction and maintenance of railway projects, and not in operations… up to 100% FDI should be allowed in dedicated freight corridors and high-speed railway networks falling under the fixed-line category, up to 74% should be allowed in the case of collaborations and joint ventures in other areas.’

Cabinet Committee on Economic Affairs (CCEA) is to consider the above cabinet note by end of this week.
Currently, in Railways, FDI is allowed only in Mass Rapid Transport Systems (MRTS) and component manufacturing.

I don’t think foreign players will be interested in capital intensive High Speed Rail (HSR) or loss making general transport. Even if GoI want, they may not invest in operations. After all rising passenger ticket rates is a difficult thing in India.

However, there might be some positive developments in the case of dedicated freight corridors.

Hoping for some heavy investment in freight networks,



1. Home Ministry gives green signal to FDI in railways - Business Standard

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