NEW DELHI, 19 June-2014, TOI: The government is moving swiftly to allow foreign direct investment in railways to upgrade infrastructure for freight and high-speed trains.
Govt moves proposal to allow 100% FDI in railways
The commerce and industry ministry has initiated the exercise to allow 100% FDI in several segments of railways, moving beyond its earlier plan to open select sectors such as high-speed train systems, dedicated freight lines built through the public-private partnership route and in certain areas of suburban rail networks. Currently, there is a complete ban on any kind of FDI in railways, except mass rapid transport systems.
High-speed trains and dedicated corridors are top agenda items for the BJP government and the intention to upgrade infrastructure was officially announced by president Pranab Mukherjee in his address to the joint sitting of both Houses of Parliament.
In her first interview to any newspaper, commerce & industry minister Nirmala Sitharaman had backed the move. “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,” she had told TOI on Monday.
After defence, where the ministry has proposed allowing up to 100% FDI, this is the second sector in which the Narendra Modi government has begun consultations for allowing greater investment by overseas players. Simpler norms for construction are also on the anvil, even as it is going slow on business-to-business (B2B) e-commerce, which will see the entry of the likes of Amazon into the Indian market in a big way.
Railway minister Sadananda Gowda has said on it needs Rs 5 lakh crore for modernization, a large chunk of which will come from the private sector. Sources said the draft note is for discussion and a final proposal will be moved after consultation with other ministries, led by the Railways. In its election manifesto, the BJP has committed to modernize and upgrade railways and launch Diamond Quadrilateral project of high-speed train network. The UPA government had also tried to relax FDI norms in railways but could not push the proposal because of the general elections.