Japan plans JV firm to finance bullet train projects in India

Jan 27 2014, 10:15 IST
Comments 0
The project that also figured in the talks between Japanese Prime Minister Shinzo Abe and Manmohan Singh has already been approved by the Planning Commission. Reuters The project that also figured in the talks between Japanese Prime Minister Shinzo Abe and Manmohan Singh has already been approved by the Planning Commission. Reuters
SummaryJapan has offered to set up a joint venture company like the Delhi Metro to finance bullet train projects in India.

Japan has offered to set up a joint venture company like the Delhi Metro Rail Corporation to finance bullet train projects in India.

The project that also figured in the talks between Japanese Prime Minister Shinzo Abe and Prime Minister Manmohan Singh has already been approved by the Planning Commission.

A Commission source said the proposed corporation will announce bullet trains for seven pair of destinations, all of them to be leveraged by a mix of yen debt and equity.

Japanese experts from a consulting firm and Indian officials have conducted surveys last week in the Mumbai-Ahmedabad corridor (about 500 km) for a pre-feasibility study for the first of these projects. Prior to that, Government of India officials from the Commission and rail ministry have been over to Tokyo to complete the details of the project.

In the joint statement made by the two Prime Ministers it was agreed that after the issuance of the inception report of the High Speed Railway system on the Mumbai-Ahmedabad route, the joint feasibility study should be completed by July 2015.

India has opted for the Japanese Shinkansen technology over competing models including the Chinese offer on two considerations. These include the safety of the Japanese technology and the niggling concerns about a tie-up with China on such a high technology project.

“The other is the cheaper funding that Tokyo has promised to make available for the project”, said the official. There were also offers from France and a couple of other countries too for the project, but just as in the case of the DMRC the government has plumped for Japan.

Each of these projects at over Rs 30,000 crore is beyond the capacity of the rail ministry to finance. Consequently it is a joint venture corporation that can finance and eventually run the high speed train corridors. A company can raise debt or equity from the markets that a government department will find impossible to do. In the Indian railway sector this will be the biggest single investment project rivalling the freight corridor plans. The project is expected to provide massive backward linkages for the rail based manufacturing sector which sits well with the government’s expectation for them too.

The joint statement is, however, guarded at this stage. Singh told Abe “that India will plan such projects based on its infrastructure priorities, commercial viability and financial resources in India”.

Among other

Single Page Format
Ads by Google

More from Economy

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...