Railways identifies new areas, business models for FDI

In a step forward to invite private and foreign investment in the Indian Railways, the Ministry has identified new areas where 100 per cent foreign direct investment (FDI) can flow in, such as facilities to supply energy from non-conventional sources and cleaning up trains.

A Railway Ministry committee, which recently finalised the policy, has also suggested a set of business models to attract investments. The areas identified by the committee for FDI include construction, maintenance and operation facilities to supply non-conventional sources of energy to the Railways, mechanised laundry facilities, installation and maintenance of bio-toilets in passenger trains, setting up technical training institutes, testing facilities and laboratories and providing technological solutions to improve safety.

Earlier this year, the Government had relaxed the FDI norms permitting 100 per cent investment in rail projects, such as suburban corridor projects, high-speed train projects, dedicated freight lines, rolling stock including train sets, railway electrification, signalling system, freight terminals and logistics parks and passenger terminals.

The committee has suggested three business models for high-speed train projects, such as in projects where there are limits on operations and a firm wants to invest in upgrading the existing rail network for speed above 120 km/h or semi-high speed network. In dedicated freight lines, the Railways have permitted operations by investors, subject to certain conditions.

Additionally, it has identified electrification projects, where the operation of traction would continue to be with the Railways if it involves upgradation of existing network.

For non-conventional energy sources, such as solar, tidal, wind or biodiesel, the Ministry has said it would provide land at ₹1 lease a year if the power is produced for use by the Railways.

Similarly, mechanised laundry facilities could be set up on public-private partnership (PPP) basis. It also suggested some freight lines — new and doubling — that could be taken up on PPP basis.

The Ministry said these were broad guidelines and indicative projects, and would be taken up only if they were found commercially viable.

In several projects, such as rolling stock manufacturing units, it pointed out that no administrative nod was required if the Railways did not have to provide land on lease or make any commitment on purchases.