Friday, September 26, 2014

Railways FDI in operations too

The FDI in railways, which has been approved by the Union Cabinet, will not be confined only to greenfield projects, but will also be applicable in operation and maintenance of rail functions. The railways has constituted a high-level internal committee to draft guidelines on FDI and specifically listed a total of 10 areas where the foreign participation would be sought, which include mass rapid transport system or Metro system as well. Even the functions which are seen within the railways as its core operations would be open for the FDI as is stated in the circular on constitution of the committee. Signalling and manufacture of coaches and locos, which are done by various workshops of the railways, would be open for the FDI, besides operation and maintenance of suburban corridor projects, the circular stated.
“The FDI in infrastructure will be for construction, operation and maintenance in (a) suburban corridor projects through public-private partnership (PPP); (b) high-speed train projects; (c) dedicated frieght lines; (d) rolling stock, including train sets, and locomotives/coaches manufacturing and maintenance facilities; (e) railway electrification; (f) signalling systems; (h) freight terminals; (i) passenger terminals; (j) infrastructure in industrial park pertaining to railway line/sidings, including electrified railway lines and connectivity to main railway line; and (k) mass rapid transport system,” the circular has stated. “The Mumbai or Chennai suburban system will be open for FDI, along with the Kolkata Metro system, as could be seen in the clarification in the scope of the foreign participation in the railways,” said an official.
The high-level committee has been given three weeks’ time to submit its report on drafting guidelines for FDI in railways. Explaining the rationale for allowing FDI in many areas seen core to the railways, the circular reasons “...since FDI policy is a sectoral policy meant for governing all allied companies working in rail sector, permitting foreign investment will bring down the cost of funds for them leading to growth of manufacturing industry and employment”.
However, the circular hastens to clarify that the FDI in railways should not be seen as privatisation. “This in no way leads to privatisation of existing Indian railways networks or its core activities.”


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