The government may next month allow 100 per cent Foreign Direct Investment (FDI) in high speed train systems and dedicated freight lines as the country's last great state-controlled industries is opened up.
The Department of Industrial Policy and Promotion under the Commerce Ministry has circulated a final note for consideration of the Cabinet for allowing FDI in suburban corridors, high speed tacks and freight lines connecting ports, mines and power installations, official sources said.
However, existing passenger and freight network operations will not be opened to foreign investors.
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After receiving inputs from concerned ministries, DIPP in the Cabinet note has proposed allowing FDI in suburban corridors, high-speed train systems, freight line projects implemented through public-private partnership (PPP) mode.
DIPP has reasoned that there was an urgent need to modernise, strengthen and expand the Indian railway network which would require very large capital investment.
This makes private participation imperative in the construction of fixed rail infrastructure especially in highly capital and technology intensive areas like elevated rail corridor projects, they said.
FDI up to 100 per cent will be permitted in these areas expect the joint venture model where the railways will invest at least 26 per cent of the equity. The FDI will not require FIPB approval.
At present, there is a complete ban on any kind of FDI in the railways sector except mass rapid transport systems.
It has also suggested widening the definition of 'infrastructure' by including railway line and railway sidings.
As per the proposal, foreign companies would be allowed to pick up 100 per cent stake in the special purpose vehicle (SPV) that will construct and maintain rail lines connecting ports, mines and industrial hubs with the existing rail network.
