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  India   Railway to partner foreign govts for big projects

Railway to partner foreign govts for big projects

Published : May 22, 2016, 2:25 am IST
Updated : May 22, 2016, 2:25 am IST

In a first-of-its-kind move, the railway ministry has decided to go for “government-to-government (G-G)” partnerships with other countries for its big-ticket projects.

Suresh Prabhu (Photo: G.N. JHA)
 Suresh Prabhu (Photo: G.N. JHA)

In a first-of-its-kind move, the railway ministry has decided to go for “government-to-government (G-G)” partnerships with other countries for its big-ticket projects.

Speaking exclusively to this newspaper, railway minister Suresh Prabhu said, “In the coming years we are going to witness massive G-G investment in the railways. We are ready to sign agreements with as many as 14 countries for G-G investment. This will allow us to execute big-ticket projects, like high-speed trains and modernisation of stations, in one go against the piecemeal approach of the past.” Mr Prabhu said that his ministry would be moving the Cabinet for approval.

The Japan government has indicated that it could invest $25 billion in Indian Railways. Talks with the South Korean and French governments for re-development of the New Delhi Railway Station and Chhatrapati Shivaji Terminus, respectively, are already at an advanced stage, Mr Prabhu said.

The other countries Indian Railways is in talks with include China, Germany, Czechoslovakia, the United Arab Emirates and Spain.

The Indian government will collaborate with foreign governments for investment, technical expertise, infrastructure upgradation and technology transfer.

Once contracts with foreign governments are signed and sealed, the Indian railways intends to hand over semi-high-speed routes for execution to them. “We are looking to hand over one route each to these 14 countries to run semi-high-speed (160-200 kmph) trains,” Mr Prabhu said, adding that the “Indian railways will integrate the developed infrastructure with the existing networks.”

The semi-high-speed routes to be handed over include New Delhi-Kanpur, New Delhi-Chandigarh-Ludhiana, Mumbai-Nagpur, Bengaluru-Chennai, Nagpur-Bilaspur, Mumbai-Goa, Chennai-Hyderabad and Nagpur-Secunderabad.

Mr Prabhu said that the “government-to-government” partnerships would be a step beyond the much-talked about foreign direct investment (FDI).

In the G-G route, the railways would not be dependent on private companies for investment. Instead, the Indian government will acquire soft loans from foreign governments for specific projects. This would help the railways secure an assured large corpus of funds at a substantially lower rate of interest and with a much bigger timeframe to pay the money back.

That the FDI route was not producing the desired results was evident from the government’s failure to attract foreign players in the manufacturing of “train sets” which would have replaced the current LHB-driven Rajdhani and Shatabdi trains. For the 2014 project, not a single foreign investor showed interest because they felt that the project was not profitable enough to invest.

The shift from the FDI route to G-G is, thus, significant. It is a proactive approach to put into action the grand plans announced by the railways in the last two years of the NDA government. The Indian railways is not abandoning the FDI route for investment. Many ongoing and future projects involving setting up of workshops and last-mile connectivity will still remain FDI-dependent.

Box: Projects under consideration

South Korea government may invest $1.5bn to redevelop the New Delhi Railway Station

France has shown interest in re-developing Chatrapati Shivaji Terminal, Mumbai and the Ludhiana station

China may partner with Indian Railways to develop the semi-high speed route (Bengaluru-Mysore-Chennai)

Location: India, Delhi, New Delhi