Rail Budget: Thrust on PPP, FDI to improve rail infra, create jobs, says India Inc

Written by Press Trust of India | New Delhi | Updated: Jul 9 2014, 03:35am hrs
FDIIndia Inc said emphasis on forging public-private-partnerships and attracting FDI will give a boost to infrastructure development and generate jobs.
Terming the Rail Budget as growth-oriented, India Inc today said the emphasis on forging public-private-partnerships and attracting FDI will give a boost to infrastructure development and generate jobs.

"We welcome the proposal for financing bulk of future projects through public-private-partnership (PPP) route that will help overcome the constraint of low investment, enhance connectivity and accelerate the process of modernisation," Ficci President Sidharth Birla said.

Presenting the Narendra Modi government's maiden Rail Budget, Railway Minister Sadananda Gowda announced setting up of logistic parks and private freight terminals on PPP model.

Noting that the capital intensive Railways has not been successful in raising substantial resource through PPP route, Gowda said that bulk of future projects would be financed through this mode, including the high-speed rail, which requires huge investments.

"Once you do a PPP it stands on its own. A special purpose vehicle gets created separately and that company is accountable for its return on investment. So, the Indian Railways will benefit from it if it's profitable, otherwise it will not benefit," President & CEO South Asia GE Transportation Nalin Jain said at a CII conference here.

Asked about potential areas where FDI can be attracted, he said: "Locomotive, manufacturing, wagons anything which is moving, are areas where FDI can come in."

Managing Director of Alstom Transport India Bharat Salhotra said: "Opening the Railways' sector to foreign direct investment is a welcome move that would provide the much- needed push to the cash-strapped sector as well as foster creation of world class rail infrastructure."

PHD Chamber of Commerce President Sharad Jaipuria said the announcements would go a long way to enhance rail infrastructure and generate employment opportunities.

Chief Executive of Railway Business at Larsen & Toubro Rajeev Jyoti sought more clarity on the proposal to seek Cabinet approval on foreign direct investment (FDI).

"If you have an FDI, you are not going to open FDI with no criterion... " he said.

CII President Designate Sumit Mazumder said: "If projects are made attractive to private investors, funds through PPP and FDI will be available. Multilateral funding should also be accessed for high speed corridors".

Mahindra & Mahindra CMD Anand Mahindra tweeted: "Renewable energy inputs, e-enablement, more pvt sector involvement. And no megalomaniacal schemes. What more were the markets looking for"

Assocham President Rana Kapoor said the PPP models will attract a lot of private and overseas investment as the new government enjoys a great amount of credibility to deliver.

The Rail Minister also announced connectivity to ports through PPP, procurement of parcel vans and rakes by private parties for resource augmentation.

"If the Railways' efficiency improves, the overall cost of transportation will improve, providing competitive edge to the exporters," EEPC India Chairman Anupam Shah said.

"Overall focus on project management, e-governance and institutionalizing process to involve states in all key decision making will ensure that Railways becomes the true lifeline of the nation," Kapoor said.

Manish Agarwal, Leader of Capital Projects and Infrastructure at PwC India, said that given limited success on station-modernisation projects so far, the implementation remains to be seen.

The Railway Minister had said that some stations will be developed according to international standards through PPP model.

Chairman of CII National Committee on Chemicals Nadir Godrej said: "Movement of goods from and to ports is critical- this will surely help create jobs in the export sector in inland locations having rail connectivity."

Steel major SAIL Chairman C S Verma said the thrust on close monitoring of dedicated freight corridor projects, new high speed and semi-high speed projects, track renewal, development of wagon leasing business, upgradation of stations, procurement of rolling stock, doubling and tripling of lines and gauge conversion is likely to boost steel consumption.

"Railway Budget focuses on implementation, IT and privatisation which will go a long way in improving the functioning of Indian Railways with added user satisfaction," Federation of Indian Export Organsiations President M Rafeeque Ahmed said.

"The impetus to encourage PPP models and FDI in Railways are very encouraging, will mobilise resources and go a long way to reduce borrowings for the ministry," MD and Group CEO of Jindal Steel and Power Ltd (JSPL), Ravi Uppal, said.

Hindustan Chamber of Commerce Vice-President Hasmukhlal D Vora said the Budget is "very ambitious" and speaks volumes of long term proposals to bring the Railway into profit stream.

Meanwhile, Managing Director of Transport Corporation of India Vineet Agarwal hoped that the continuous push to electrification, gauge conversion and new lines will make the railways and the logistics sector more efficient.

However, Fitch Group company India Ratings & Research said while the Railway Budget 2014-15 talks about India trying to be the largest freight carrier globally and identifies alternative funding requirements to achieve this target, it does not state a clear strategy to meet these requirements.

"We are delighted with the impactful new initiatives of both high & semi-high speed projects, the addition of 17 premium trains and 38 express trains, also the enhanced road-rail connectivity to key tourist locations. The Railway Budget is visionary and long term in impact and a significant step towards developing new tourism hubs," MD at Thomas Cook (India) Madhavan Menon said.

"The higher plan outlay for improving safety lends hope that global infrastructure companies can provide their expertise in field of safety both in project execution and operations," Jain said.

Managing Director at Jindal SAW Sminu Jindal said that announcing battery-operated cars to ferry the old and differently-abled at all major railway stations is an encouraging step.

However, a safe corridor to manage traffic and to ply these battery operated cars for elderly and disabled between platforms needs to be developed, he added.

Chairman of American Chamber of Commerce in India Arun Jain described the intent to promote private investment, FDI and adopt the PPP route as welcome steps, saying these should open up opportunities for quality global infrastructure companies to participate in India's growth.