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Exploring the Government Initiatives in the Indian Railway Sector

Exploring the Government Initiatives in the Indian Railway Sector

The Indian railway network is considered one of the largest systems in the world under a single management. The Government of India is now keeping its focus on making the web an investment-friendly sector through reforms in the policy. Recently, it enabled FDI in railway sector in order to improve the infrastructure for high-speed trains and freight trains. 

In the present scenario, the private sector is also looking to invest in rail projects.

Even though no freight or passenger train services are being handled or operated by the private sector, licensed private players are now offering container services, which are being provided on the basis of Pan India.

A few of the latest initiatives undertaken by the government in order to encourage the participation of the private sector are-

FDI in Railways

The government has cleared the proposal for allowing 100 percent FDI in railway sector, other than operations through the automatic route. Investments that are being routed through this mode would not need prior approvals from the government.

FDI inflows in railway-related components from April 2000 to February 2015 had been around USD 634.27 million.

Foreign Investment in Railway Services

Suresh Prabhu, Railway Minister, has invited other nations to make India their base for manufacturing. The government wants to invest USD 120 billion in the coming five years for the development of railway services. 

As India has an edge in terms of skilled workforce and also in the huge base for manufacturing and consumer base, it would be a profitable sector for foreign investors, as suggested by the minister.

In fact, investment via public-private partnerships has witnessed an increase to INR 5,781 crore or USD 916.04 million.

Global Companies in Railways Manufacturing

Bombardier, TALGO, Hyundai-ROTEM, along with CAF have aligned in the country already for manufacturing semi-high-speed trains, which will be used as a faster mode of travel between cities.

This was announced by the railway minister in the rail budget of the current year.

The approximate cost of these projects will be around INR 2,500 crore for about 15 sets of the train. In case they succeed in the Indian Market, more sets will be ordered for consumption.

These sets of trains are mostly similar to bullet trains, wherein the blocks are self-propelled and not pulled with a locomotive’s help.

No Plan to Privatise the Railways

There have not been any plans for privatizing the Railways, even though private participation in terms of strengthening and building the infrastructure of railways might be allowed. 

With this, private participation in building the infrastructure of railways can be one of the key areas of focus for the ministry this year. Although, there are no plans yet for mobilizing private funds for railways.

Ever since the NDA government led by Narendra Modi came into the spotlight, they have been looking aggressively at private investment in the sector.

As the government has cleared 100 percent FDI in railway sector, it is a window of opportunity for foreign organizations to invest in the Railways of India.

About FDI India

At FDI India, we make the complex structure of foreign investments and transactions simple under FDI via years of experience in the field. 

Our aim is to transform the face of the facilitation services of the FDI in India by keeping our focus on sustainable investments or loans to help the businesses of India. 

FDI India is transforming the climate of the country by making the business environment for investors simple. 

Its experts specialize across different states and sectors of India, handholding investors through their investment lifecycle ranging from pre-investment to aftercare.

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