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Govt notifies FDI cap relaxation in Railways

Press note comes a day after DIPP notified increased cap of 49 per cent FDI in defence sector.

By: ENS Economic Bureau | New Delhi |
August 28, 2014 12:49:26 am

In what would be a shot in arm to the cash-strapped Indian Railways, the government on Wednesday notified the liberalised foreign direct investment norms for rail infrastructure, allowing 100 per cent FDI through automatic route in the sector.

According to a press note issued by the department of industrial policy and promotion (DIPP), the policy for private investment in rail infrastructure has been amended to allow FDI in the railway transport sector including for construction, operation and maintenance of high-speed train projects; suburban corridor projects through PPP; dedicated freight lines; rolling stock including train sets; locomotives manufacturing and maintenance facilities; railway electrification and signalling systems; freight terminals and passenger terminals; infrastructure in industrial park pertaining to railway line, and mass rapid transport systems.

The press note comes a day after the DIPP notified the increased cap of 49 per cent FDI in the defence sector from the existing 26 per cent.

While presenting the Rail Budget 2014-15 last month, railways minister Sadananda Gowda had said that the government was looking at attracting foreign investment in the sector. “Growth of the railway sector depends heavily on availability of funds for investment in rail infrastructure. Internal revenue sources and government funding are insufficient to meet the requirement. Hence, ministry of railways is seeking Cabinet approval to allow FDI in rail sector,” the minister had said.

Early this month, the Cabinet gave a go-ahead to allow 100 per cent FDI in the railway infrastructure, barring operations, through automatic route.

“FDI beyond 49 per cent of the equity of the investee company in sensitive areas from security point of view will be brought before the cabinet Committee on Security for consideration on a case to case basis,” the press note said. The government has, however, not allowed FDI in train operations and safety. The press note said that the definitions of infrastructure and common facilities has also been widened to include railway line and sidings.

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