The government will allow foreign direct investment (FDI) in high-speed trains and rail cargo passageways even for those that are operated through public-private-partnership (PPP) programmes, which could pave the way for overseas investors to pick up equity in projects such as the Delhi-Mumbai dedicated rail freight corridor.
The Department of Industrial Policy and Promotion (DIPP) has moved a fresh proposal to include freight corridors and high speed train systems within the broad category of "railway operations" where FDI will be allowed.
The Cabinet is shortly expected to take a decision on this. "There is an urgent need to modernise, strengthen and expand the Indian railway network, which would require very large amount of capital investment," a source said.
"This makes private participation imperative in the construction of fixed rail infrastructure especially in areas such as rail corridor projects, suburban corridors and high speed trains," the source added.
FDI will not be allowed in train operations and safety. According to the proposal, foreign investment would also be allowed in "suburban corridor, high speed train systems and dedicated freight line projects implemented in PPP mode", the official said.
FDI up to 100% will be allowed in most of these areas. The railways ministry will set up a core group with requisite technical and security expertise to evaluate proposals of projects "with a critical a view to ensure that private and foreign investments are not detrimental to overall national security," sources said.