Indian railways identifies 17 areas for 100% FDI

In a move to bring major investments in railway infrastructure, Indian railway has indentified 17 special areas where 100% Foreign Direct investments (FDI) would be permitted. According to the guidelines approved by the government under its FDI policy, 100% FDI would be permitted in facilities like cleaning up trains and installation of bio-toilets in passenger coaches and setting up of mechanized laundry facilities. A committee constituted by Railway Ministry, to finalise the policy has also suggested a set of business models to attract investments in railway sector, is facing a severe cash crunch to the tune of Rs 30,000 crore every year.  Besides bio-toilets, cleaning operation and mechanized laundries, the areas identified by the committee for FDI include construction, maintenance and operation facilities to supply non-conventional sources of energy to the Railways, installation and maintenance of bio-toilets in passenger trains, setting up of technical training institutes, testing facilities and laboratories and providing technological solutions to improve safety. Furthermore, the committee has suggested three business models for high-speed train projects including projects where there are limits on operations and a firm wants to invest in upgrading the existing rail network for speed above 120 km per hour or semi-high speed network. In dedicated freight lines, the Railways has permitted operations by investors, subject to certain conditions. The government has now allowed investment in dedicated freight lines on a Joint Venture and/or PPP model, with clear revenue sharing guidelines. All new suburban corridor projects are permissible when launched through PPP route by MoR. The developer can construct, maintain and operate the corridor within the concession period. It is expected that these new guidelines can attract upto Rs 90,000 crore FDI into Indian Railways. Ever since its origin, Indian Railways had always been shut off from receiving any kind of FDI, considering security risks involved. However, in August this year, the government had eased FDI norms permitting 100 percent investment in rail projects, such as high-speed trains, suburban service, dedicated freight corridors, freight and passenger terminals. FDI is also being permitted for rail route electrification, signalling system and logistics parks.