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Govt to decide on FDI policy in Indian railways: Commerce Minister

05 Mar 2014 Evaluate

Commerce and Industry Minister Anand Sharma has expressed confidence that the Cabinet will soon take a view on liberalising Foreign Direct Investment (FDI) policy in railways sector.  Currently, there is a complete ban on any kind of FDI in Indian railways sector except mass rapid transport systems.

The Department of Industrial Policy and Promotion (DIPP) has proposed to allow 100 percent FDI under automatic route in high speed train systems, suburban corridors, high speed tracks and freight lines connecting ports and mines. Further, DIPP has also proposed easy exit conditions from railway projects like allowing developers to exit before the three year lock in period. 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.

Presently, Indian industrial development and exports have been suffering due to poor infrastructure, hampering output and raises the cost of production. The move is likely to provide adequate funds to the railway ministry, which can play an important role in providing a reliable transport facility necessary for promoting industrial growth in the country.

However, the Home Ministry and the Department of Economic Affairs (DEA) have expressed concerns on proposal for rising FDI in this sensitive sector, citing reasons like security concerns and investments from China which is India’s main rival on the economic and military fronts, with unresolved border disputes between the two nations.

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