Cabinet likely to consider FDI in Railways next week

NEW DELHI: The department of industrial policy & promotion ( DIPP) will push for a decision on foreign direct investment in railways next week before the general elections are announced after putting in a mechanism to address concerns raised by the home ministry.

The DIPP has proposed that a core committee within the Railways ministry should examine all proposals of foreign direct investment ( FDI) from the perspective of security before giving a final clearance.

Without singling out Chinese investment, the department has recommended in its final Cabinet note that the proposed committee vet all FDI proposals. The move comes after the home ministry had pointed out that FDI from China in railways might pose a danger to national security and Chinese investments should not be allowed in border areas such as Jammu & Kashmir and northeastern states.

“The security concerns raised are valid. We have addressed them to the best of our ability and asked for an internal core committee to look at all investment proposals, rather than singling out Chinese investment,” said a senior DIPP official, who did not wish to be named. “It should likely be taken up next week by the Cabinet,” he added.

The committee will ensure railways projects with private or foreign investments are not detrimental to overall national interests, he added.

The DIPP has sent the note to the Cabinet, seeking approval to allow 100% FDI in railway infrastructure such as elevated rail corridor projects, freight terminals, suburban corridors, dedicated freight lines and high-speed train systems. The proposal could be taken up next week before the elections are announced and the model code of conduct kicks in.

As per the proposal, the core committee will comprise officials with technical and security expertise to examine each proposal. FDI proposals in railways will not have to go to the Foreign Investment Promotion Board ( FIPB) since the sector is recommended for the automatic route. The final Cabinet note has also incorporated railway lines and sidings in the definition of infrastructure that will be open to foreign investment.


China is interested in investing in India’s railways, among other infrastructure sectors, as per the fiveyear trade and economic planning cooperation report by the Chinese working group submitted to the Indian government. China is keen to fund electrification, high-speed trains, wagons, last-mile connectivity and gauge conversion in India’s railways.

The proposal is part of the FDI reforms’ drive revived by the government last year that led to raising of FDI caps in some sectors, along with changing of entry route to automatic. A decision on easing restrictions on FDI in construction and housing is also pending with the Cabinet.

While the DIPP has received comments on FDI in e-commerce, opening up of e-commerce is unlikely within the tenure of this government.