The government has started the exercise to relax foreign investment norms in the railways sector by permitting 100 percent Foreign Direct Investment (FDI) in high-speed train systems and dedicated freight lines.
The Department of Industrial Policy and Promotion (DIPP) under the Commerce and Industry Ministry has circulated a draft cabinet note on the matter for inter-ministerial consultation. After receiving the comments from different ministries, the note will be placed before the Union Cabinet for approval. Besides, there is also a proposal to allow foreign investment in sub-urban corridors and freight lines connecting ports, mines and power installations. However, the government has decided not to open existing passenger and freight network operations to foreign investors.
Railways is an important sector for India and has the potential to raise India's economic growth by over one percent. Therefore, it has become imperative to modernise, strengthen and expand the Indian railway network which would require very large capital investments. However, presently, there is a complete ban on any kind of FDI in the railways sector except mass rapid transport systems. The move will help to attract large foreign investments which in turn will provide impetus to Indian railways sector.