Govt notifies FDI in railway operations

Opens operations in high-speed train, freight and suburban corridors to private sector

The government on Wednesday opened the railways for private and foreign investments in select areas - high-speed train, suburban corridors and dedicated freight lines. Foreign investment would also be allowed in construction and maintenance of these lines and rolling stock manufacturing facilities, electrification and signalling.

However, foreign direct investment (FDI) beyond 49 per cent in sensitive areas will require Cabinet approval on a case-to-case basis. FDI was so far allowed only in mass rapid transit (MRT) systems of railways.

Other key areas that would now be open to FDI include freight terminals, passenger terminals and infrastructure industrial parks relating to railway sidings. Through a notification, the government also widened the definitions of "infrastructure" and "common facilities" in the consolidated FDI policy circular of February 2014, to include railway line or sidings, including electrified tracks and connectivity to main railway line.

Despite many announcements of projects in the private-public-partnership mode in Railway Budgets, actual private investment via this route since 2000 has been just Rs 3,000 crore. Of this, less than 10 per cent has come from private companies, according to a report by the Comptroller and Auditor General of India.