Tamil Nadu govt set to buy out Indian Railways' stake in Chennai MRTS

State to acquire Railways' 33% stake for ₹600-700 crore, seeks ₹4,000 crore World Bank loan to upgrade the 25-km line to Metro standards by 2027

The Tamil Nadu government is set to acquire a 33 per cent stake in Chennai’s mass rapid transit system (MRTS) from its joint venture partner, the Indian Railways, according to two sources. The move will give the state government complete control of the rail network that has dominated the southern city’s skyline since 1995. 

The state holds a 67 per cent stake in the joint venture and the government for Chennai Metro Rail Ltd (CMRL) will pay ₹600-700 crore to the Indian Railways to acquire the company. A memorandum of understanding (MoU) is expected to be signed either this month or in January, the sources said. 

The company runs a 25-km stretch of the MRTS between Chennai Beach and St Thomas Mount. 

The sources cited above said the state government was in talks with the World Bank for a ₹4,000 crore funding to revamp the network, integrating it with the CMRL. 

According to industry veterans, this will be the first rail-to-Metro acquisition in the country. In response to queries from this newspaper, senior southern railway officials, who did not wish to be named, said it gave its formal approval to the acquisition on July 31.

 

“The approval entails the transfer of all infrastructural assets of the MRTS,including tracks, bridges, signalling, electrification, land, and buildings, as well as the operations and maintenance of the MRTS services to CMRL, for which a detailed MoU is under preparation,” the official said. 

The acquisition is expected to streamline rail operations and enable seamless intermodal connectivity in the city. 

“Such a deal is happening for the first time in India. CMRL will run it according to the Metro standards and the entire revamp will take two years. By December 2027, we are planning to have a Metro model system in these old lines,” said a state government source.

 

The World Bank funding will be used for acquiring new coaches, worth ₹1,000 crore, revamping some 20 stations, adding infrastructure like escalators, and developing infrastructure in the 500-metre vicinity of these stations. 

The plan also includes adding last-mile connectivity to these stations.  “Discussions are going on with the World Bank,” a state government source said. 

Chennai MRTS, conceptualised by the Dravida Munnetra Kazhagam (DMK) stalwart M Karunanidhi during his first tenure as chief minister in the 1970s, got formal approval in 1984 during the All-India Anna Dravida Munnetra Kazhagam (AIADMK) rule when M G Ramachandran (MGR) was chief minister. It started operations in 1995. 

The project is now getting a fresh lease of life after Chief Minister M K Stalin, Karunanidhi’s son, reportedly raised the issue with Prime Minister Narendra Modi at a NITI Aayog meeting in May 2025, which helped speed up clearance by the Indian Railways. 

 

The transfer is a key part of the long-term road map of the Chennai Unified Metropolitan Transport Authority (CUMTA) to improve the city’s public transport, and cut peak-hour travel time from up to 90 minutes now to an hour by 2048 through a massive investment of ₹2.27 trillion. A majority of this amount, ₹1.92 trillion, is earmarked for public transport. 

“The move aligns with the public-centric vision of creating an upgraded, integrated, and sustainable urban rail transport ecosystem for the Chennai region and is a fine example of the synergy between the Railways and the Tamil Nadu government working in close coordination. The merger will provide seamless multimodal integration across Metro, MRTS, suburban rail networks, and bus services in Chennai,” said a Southern Railway official.