Decision on FDI in rail sector soon

Tags: News
The Union Cabinet is expected to take a decision on relaxing foreign direct investment (FDI) norms in the cash-starved railways sector this week.

The Cabinet note has already been sent to the Cabinet Secretariat and a decision on the proposal is likely this week, sources said.

The Department of Industrial Policy and Promotion has proposed to permit 100% FDI in areas such as high- speed train systems, suburban corridors and dedicated freight line projects implemented in PPP mode.

Besides, there is also a proposal to amend the definition of 'infrastructure' for industrial parks to include railway line/sidings.

By including railway line/sidings in the definition, the proposals will be eligible for priority financing from banks and financial institutions.

Sources said that foreign companies could be allowed to pick up 100% stake in the special purpose vehicle that will construct and maintain rail lines connecting ports, mines and industrial hubs with the existing rail network.

The FDI liberalisation would help in modernisation and expansion of the sector. According to estimates, the sector is facing a cash-crunch of Rs 26,000 crore.

However, FDI will not be allowed in train operations and safety.

At present, there is a complete ban on any kind of FDI in the railways sector except mass rapid transport systems.

The move will also help in development of infrastructure for industrial purposes. The Indian Railways is facing a cash problem.

Industrial development and exports have been suffering on account of poor infrastructure which hampers output and raises the cost of production. It is felt that railways can play an important role in providing a reliable transport facility necessary for promoting industrial growth.

Players setting up sea ports and large mines need efficient railway connectivity.

However, the home ministry has raised objections in allowing foreign direct investment in highly-sensitive areas of the railways, saying such a move may compromise security of the country's largest transportation network.

EDITORIAL OF THE DAY

  • Public musn’t pay for domestic servants for our diplomats

    Nothing seems to have changed in the year and half since the fur that flew thick and fast over the case of diplomat Debjani Khobragade and her maid Sa

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

Economic integration in east Asia

As trade agreements within a global framework have become increasingly ...

Rajgopal Nidamboor

Up the ante of your conscious existence

It sounds cryptic, but is not as complex as it ...

Gautam Gupta

The ‘fake’ issue needs to be taken seriously

E-commerce players are witnessing unbelievable growth globally. Competition is increasing ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture