A day after approving the long-delayed proposal for raising the foreign direct investment limit (FDI) in railway sector, the government stated that foreign investment in railways will help in strengthening infrastructure without affecting security.
Commerce and Industry Minister Nirmala Sitharaman asserted that the government had taken the decision to ease the FDI policy in those areas of railways which will not affect security and sovereign authority of the sector. Further, the Minister added that all security-related concerns raised by the Home Ministry have been taken care of by the policy draft and essential operations being kept within the railways. Home Ministry had raised concerns over foreign investments in rail infrastructure in border areas, particularly from China. India and China are likely to sign a memorandum of understanding (MoU) for cooperation in Railways during the forthcoming visit of Chinese President Xi Jinping in September 2014. China had already sent an advance team for cooperation in the construction and overhaul of the existing railway system across India.
Railways is an important sector for India and has the potential to raise India's economic growth by over one percent. The government has approved the proposal for raising 100 percent FDI in railway infrastructure. Foreign investors can now invest in setting up of high-speed corridors, suburban rail networks, signaling projects, logistic hubs and in creating links to industrial parks. The move is likely to help in modernisation and expansion of the Railways which is facing a cash-crunch of around Rs 29,000 crore. Currently, there is a complete restriction on any kind of FDI in the Railways sector except mass rapid transport systems.