Kharge bats for FDI in rail infra projects

Says Indian Railways looks forward to industry for new innovation, investment models

In a reversal from its earlier stand, the railway ministry on Thursday invited foreign direct investment (FDI) in railway infrastructure projects.

Speaking on the sidelines of the 10th International Railway Equipment Exhibition here, organised by the Confederation of Indian Industry, Railway Minister Mallikarjun Kharge said FDI was welcome in “infrastructure projects like elevated rail corridor, high-speed rail and capacity augmentation projects”.

This is the first time the minister has openly welcomed FDI in railways.

Addressing an international gathering of about 400 companies from 24 countries, Kharge expressed his willingness to speed up public-private partnership projects in Indian Railway and get the issues resolved by taking concerns of all into account. “Indian Railways looks forward to industry for new innovation and investment models,” he added.

About a week ago, the Department of Industrial Policy and Promotion had circulated a draft Cabinet note on review of FDI policy in railway transport among five ministries, seeking their responses.

According to officials, the key sectors that are likely to benefit are capacity augmentation projects such as line doubling, build-operate-transfer railway projects, Non Government Railway Model for which FDI ceiling is expected to be 100 per cent and approval is proposed to be under the automatic route, without the Foreign Investment Promotion Board’s (FIPB) approval. A 74 per cent FDI ceiling is proposed for the projects under the joint venture model.

FDI in Indian Railways is expected to help the ministry attract foreign investment and encourage international players to invest in rail and port connectivity projects, dedicated freight corridors, logistic parks, station development, locomotive manufacturing units and power plants.

The draft Cabinet note recommends amendment to Schedule I of Industries Act 1951, which currently doesn’t permit FDI in sectors such as atomic energy and railways.

Government officials close to the development also hinted that FDI would not be allowed in operations. Exception to this would be high-speed train systems, dedicated freight lines and rail connectivity and certain PPP projects.

Speaking to reporters, acting Railway Board chairman Arunendra Kumar said the Ministry of Railways would respond to the DIPP proposal in the usual time of 15 days. “The proposal was initiated by DIPP and we are carefully examining their proposals. There are no contentious issues between the two ministries,” said Kumar.