The government is likely to allow foreign direct investment (FDI) in the railways sector, which is facing a cash crunch, in order to develop rail lines between project sites and existing network. The move will help in attracting more FDI besides helping in the development of infrastructure for industrial purposes.
The Department of Industrial Policy and Promotion (DIPP) has proposed to permit 100 percent FDI under automatic route that will construct and maintain rail lines connecting ports, mines and industrial hubs with the existing rail network. It will be first-to-last mile connectivity between ports, coal mines to the existing railway freight stations and will smooth the movement of raw materials from mines to ports, it added. The DIPP has completed consultations with the concerned ministries on the proposal and will soon seek Cabinet nod for the proposal.
Presently, Indian industrial development and exports have been suffering due to poor infrastructure, which hampers output and raises the cost of production. Indian railways can play an important role in providing a reliable transport facility necessary for promoting industrial growth in the country. The move will provide adequate funds to the railway ministry, whose effort towards attracting funds through public-private partnership for infrastructure projects have failed. Further, railway ministry expects Rs 25,000 loss in the passenger segment for this year.
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