Wednesday, 8 January 2014

Cabinet likely to permit FDI in high-speed trains, other projects

In a move which will help attracting more and more FDI besides development of infrastructure for industrial purposes, the Cabinet is likely to consider later this month the proposal to open the sector, especially high-speed train systems and development of infrastructure, to foreign investment. This decision comes on the heels of Home Ministry granting an in-principle nod to FDI in railways.

The Department of Industrial Policy and Promotion (DIPP) has proposed 100 per cent FDI through automatic route in the cash-starved railways sector. According to the proposal, foreign investment would also be allowed in 'sub-urban corridor, high-speed train systems and dedicated freight line projects implemented in Public-Private-Partnership (PPP) mode. It has also suggested widening the definition of 'infrastructure' by including railway line and railway sidings.

The Department of Industrial Policy and Promotion (DIPP) has also proposed to de-licence and de-reserve few areas of the sector. FDI will not be allowed in areas related to train operations and safety. At present, there is a complete ban on any kind of foreign direct investment (FDI) in the railways sector except mass rapid transport systems.

Further, DIPP has also recommended that companies should be allowed to own complete stake in the special purpose vehicle (SPV) which would construct and maintain rail lines connecting ports, mines and industrial hubs with the existing railways network.

Indian Railways has been facing a cash problem, on the same time Industrial development and exports too have taken a hit on account of poor infrastructure, which hampers output and raises the cost of production, this decision if implemented would act like one fix for both the problems.

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