In a move which could be a shot in the arm for the cash-strapped Indian Railways, the government notified liberalised Foreign Direct Investment (FDI) norms for rail infrastructure, permitting 100% FDI through automatic route in the sector, just a day after it notified FDI for the defence sector.
According to a press note issued by the department of industrial policy and promotion (DIPP), the policy for private investments in rail infrastructure has been amended to allow FDI in the railway transport sector, including suburban corridor projects through Public Private Partnership (PPP), dedicated freight lines, rolling stock including train sets, locomotives/coaches manufacturing and maintenance facilities, railway electrification, signalling systems, freight terminals, passenger terminals and infrastructure in industrial parks like railway line/sidings and mass rapid transport systems.
However, proposals involving foreign direct investment (FDI) beyond 49% in sensitive areas, from security point of view, will be placed before the Cabinet Committee on Security (CCS) for approval by the Railway Ministry on a case-to-case basis. Also, FDI will not be allowed in train operations and safety.
Further, through a notification, the government also widened the definitions of 'infrastructure' and 'common facilities' in the consolidated FDI policy circular of February 2014, to include railway lines or sidings, including electrified tracks and connectivity to main railway line.
This move would definitely help mop up resources for the sector, which is currently facing a cash crunch of around Rs 29,000 crore. Despite many announcements of projects in the private-public-partnership mode in Railway Budgets, actual private investment via this route since 2000 has been just Rs 3,000 crore, of this, less than 10% has come from private companies, according to a report by the Comptroller and Auditor General of India.
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