In an important development the Railway Board and a Cabinet committee on Railways on 12 November 2014 identified 17 key areas where 100% Foreign Direct Investment (FDI) can be allowed. These areas are basically associated with developing infrastructure for the huge railway network and improving the safety on the network. The 17 areas which have been identified for allowing 100% FDI would be able to receive investments from foreign as well as private entities. The information pertaining to FDI has been notified by the govt. to the general public for getting their feedback and suggestions on this issue. Experts believe that FDI worth Rs. 90,000 crore could be attracted if it is allowed in these 17 areas.
Which are the 17 areas identified for 100% FDI?
1) Installation and maintenance of Bio-toilets in passenger coaches
2) Technological solutions for manned and unmanned level crossings (Construction and maintenance of ROB/RUB /Limited Height Subway)
3) Technological solutions to improve safety and reduce accidents (Installation and maintenance of Asset failure detection systems (Track/ OHE/ Rolling Stock/Signaling etc.)
4) High Speed Train Projects: Projects involving those trains which will run above 250 Km/hr speed; and will have no connection or link with any existing railway line or route. The designer will have complete freedom to exercise his creativity and ideas; Government will also chip in with resources and money.)
5) Mechanized laundry (land will be leased by Ministry of Railways at Re 1 / annum)
5) Producing non-conventional energy from sources such as solar, tidal, wind etc with open market tender being offered.
7) Rolling stock procurement
8) Concessioning of standalone passenger corridors (branch lines, hill railways etc). (renovation of these lines, optimizing them for better commercial usage)
9) Testing facilities and world class laboratories for experimenting new technology
10) Setting up Railway Technical Training Institutes
11) Construction of world class passenger terminals and renovation/maintenance of existing stations
12) Creation of Freight terminals/ Logistics Parks in strategically important locations
13) Signaling system – Construction of new facilities to develop advanced systems and renovating/maintaining existing systems
14) Railway Electrification
15) Rolling stock including train sets and locomotives or coach manufacturing and maintenance facilities.
16) Dedicated freight lines on a Joint Venture and/or PPP model, with clear revenue sharing guidelines (Private Trains on certain lines will also be allowed from now on)
17) Suburban corridor projects through PPP: All new suburban corridor projects are permissible when launched through PPP route by MoR. The developer can construct, maintain and operate the corridor within the concession period.
Why Indian Railways need FDI?
Indian Railways is facing a severe cash crunch to the tune of Rs. 30,000 crore every year and is unable to generate the funds from its operations to upgrade its infrastructure and safety features. It requires huge investments if it wishes to bring ambitious projects like high-speed trains and bullet trains to surface. However, the present sources are meager to support investment in these sectors. Railways also requires urgent investments in areas such as supplying hygienic water to rail commuters, upgrading passenger safety and security, providing bio-degradable toilets in rail coaches, etc.
How the concept of FDI in Indian Railways came about?
Ever since its origin, Indian Railways has kept itself aloof from receiving any kind of FDI, considering security risks involved. It was also thought that Railways has immense social responsibilities and hence cannot have entirely commercial perspective as far as its operations in concerned. But lately it was observed that time has come to bring funds as well as expertise of foreign and private entities who can provide immense value addition to the operations of railways. During August 2014, the Union Cabinet cleared the provisions for brining FDI into the Indian Railways. This was the first time that concept of FDI for Railways was brought to surface.
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