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Suresh Prabhu
Indian Railway Minister

The Indian government’s recent move to permit 100 per cent foreign direct investment in construction, operation and maintenance of railway infrastructure would open up the rail sector to large opportunities for investment, Railway Minister Suresh Prabhu has said. “Past experience shows that there is need for a transparent, balanced, fair and bankable framework under which customers and investors can make investments in the rail sector,” he noted.

Indian Railways is looking at 100 per cent FDI in suburban rail corridors through public-private partnership, high-speed train projects, dedicated freight lines, rolling stock including locomotives and coaches and their manufacturing and maintenance facilities, railway electrification and signalling systems, freight and passenger terminals, and infrastructure in industrial parks pertaining to railway lines an sidings, and mass rapid transport systems.

Suresh Prabhu said, “Indian Railways requires huge resources to augment its capacity and for modernisation. Initiatives for building rail connectivity to ports and mines have been undertaken successfully by involving customers. A Participative Policy was launched in December 2012 subsequent to approval of the (Union) Cabinet for undertaking rail connectivity and capacity augmentation projects through five participative models. Financial commitments have already been made for 17 projects under this policy.”

On the basis of the Participative Policy, the Ministry of Railways has prepared model concession agreements for different participative models. These agreements, prepared by the Committee of Executive Directors, Railway Board, in consultation with legal consultants and the Ministry of Law, provide a framework for rights and obligations of different parties and risk allocation between them in a fair manner, thus balancing risks and responsibilities.

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