Private Investment in Rail Infrastructure

By September 29, 2014 December 20th, 2019 No Comments
From the times where no
investment (domestic or foreign) was allowed in rail transport sector during
the Industries (Development and Regulation) Act, 1951 era, to one where Indian
railways have now been opened up to private sectors including foreign
investment up to 100% under the automatic route marks an important reform in
the legal regime to be worthy of attention.
The Department of Industrial Policy &
Promotion, Government of India (“DIPP”)
vide notification no. S.O. 2113 (E), dated 22nd August, 2014 (“Notification”) has reviewed its policy
for private investment in rail infrastructure and amended the list of
industries reserved for the public sector under item no. 8 of Schedule I of the
principal notification no. S.O. 477 (E) dated 25th July, 1991. Accordingly,
the said Notification provides for the permitted scope of business for private
sector as follows:
Construction, operation and maintenance of the
  1. Suburban corridor
    projects through PPP,
  2. High speed train
  3. Dedicated freight
  4. Rolling stock
    including train sets, and locomotives/ coaches manufacturing and
    maintenance facilities,
  5. Railway
  6. Signaling systems,
  7. Freight terminals,
  8. Passenger terminals,
  9. Infrastructure in
    industrial park pertaining to railway line/sidings including electrified
    railway lines and connectivities to main railway line and
  10. Mass Rapid Transport
Accordingly, it has been decided to permit FDI in
the aforementioned activities of the railway transport sector and the
amendments are made in the “Consolidated FDI Policy Circular of 2014” (“the FDI Policy”) vide Press Note no. 8
(2014 Series) dated 27th August, 2014. The Press Note has also
widened the definition of the terms ‘infrastructure’ and ‘common facilities’ in
the FDI Policy to include railway line or sidings including electrified tracks
and connectivity to main railway line.

FDI in the said activities is subject to sectoral guidelines imposed by the
Ministry of Railways. Moreover, in case of proposals involving foreign direct
investment of more than 49% in sensitive areas from a security point of view will
be taken up by the Cabinet Committee on Security (CCS) for consideration on
case to case basis.

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