Following the Union Cabinet’s approval to proposal for 100 percent foreign direct investment (FDI) in the Indian Railways, the stage is set for a massive revamp of the infrastructure in the sector.
The Cabinet on August 6, 2014 cleared the proposal for attracting FDI in areas such as high-speed train systems, suburban corridors and dedicated freight line projects implemented in PPP mode. However, the relaxed FDI norms will not apply to train operations and safety segments.
The decision is in line with Finance Minister Arun Jaitley’s Budget speech wherein he had spoken of strengthening the rail infrastructure through FDI liberalisation in the sector, which would help modernisation and expansion of several projects.
The sector is said to be facing a cash crunch of around Rs 29,000 crore and allowing FDI will help mop up additional resources. At present, there is a ban on any kind of FDI in the railways except mass rapid transport systems.
With the FDI nod, the proposed Mumbai-Ahmedabad high speed rail corridor is also expected to get a push. The construction of exclusive rail corridor for freight movement is also likely to be boosted.
The FDI proposal for railways had been pending for some time, with the Home Ministry resisting it citing concerns with regard to rail infrastructure in border areas.