Entry of foreign equity in select railway segments notified

India Wednesday notified the maiden entery limits of foreign equity in its railway sector.

A detailed note on the notification was issued by the department of industrial policy and promotion (DIPP) which said the government will allow the entry of 100 percent foreign capital into the creation of railways infrastructure, operations and management.

The note pointed out that FDI is still prohibited in the railway transport segment apart from mass rapid transport system. Foreign capital in railways was not allowed till now.

However, the new government led by Prime Minister Narendra Modi has been pushing for it to build infrastructure projects such as high-speed railways and railway lines to and from coal mines and ports.

According to the note, areas for the entry of FDI in railway segments include suburban corridor projects under public private partnership (PPP), high speed train projects, dedicated freight lines, locomotive manufacturing and maintenance facilities, among others.

Currently, the cash-strapped railways cannot fund these projects without private participation. Foreign players from Japan and China are said to be keen to participate in building up of the infrastructure.

The union cabinet had on Aug 6, 2014 approved a proposal which sought to allow FDI participation in erecting projects relating to electrification, high-speed tracks and suburban corridors.

Last-mile connectivity to boost business activity in and around ports and mines has been proposed through formation of special purpose vehicle (SPV) companies under the PPP model.