Govt may okay 100% FDI, privatisation for railways

According to a new proposal, 100% FDI will be permissible in all sectors except ‘rail operations’, where partial investment will be allowed in PPP projects of suburban corridors, high-speed networks and freight lines.

A formal announcement is awaited, but plans have been firmed up to permit 100% foreign direct investment (FDI) in railways. The Department of Industrial Policy and Promotion (DIPP) last week moved a cabinet note to bring in structural and institutional changes required to facilitate the process.

Notably, responding to demands for modernising the Jammu train station, the Prime Minister hinted at a role for private sector Friday.

“This is economically viable too, and I have discussed it with my railway friends. In this, the private parties would also be ready to invest because this is a good project economically and will benefit everyone. This would be a win-win situation and we want to move ahead in this direction,” he said in Jammu.

According to the proposal, 100% FDI will be permissible in all sectors except ‘rail operations’, where partial investment will be allowed in PPP projects of suburban corridors, high-speed networks and dedicated freight lines.

This follows recent discussions on the subject between railways minister DV Sadananda Gowda and minister of state (independent charge) for commerce and industry Nirmala Sitharaman.

As a strategy to modernise the creaky infrastructure of the cash-strapped railways and to fund big-ticket projects, the PM is keen to attract foreign and private investment.

Gowda will make a policy statement on the subject in his rail budget speech on July 8, sources said.

The new FDI policy will address existing anomalies, while enabling private/foreign players to bring in investment into projects including locomotive manufacturing and building world-class railway stations, besides big-ticket projects such as the Mumbai elevated rail corridor, officials said.

The railways technically prohibit foreign investment at present, but have been seeking private and foreign funds for specific projects, including the proposed diesel and electric locomotive factories at Madhepura and Marhaura.

In the past, several rail connectivity routes such as Mundra, Pipavav, Kandla and Mangalore have been commissioned through private line/joint venture route. The 12th five year plan provides for generating investment of approximately Rs 1 lakh crore through the Public Private Partnership (PPP) mode.