Decks have been cleared for the largest foreign investment in India’s railway sector. The Cabinet has given its nod to set up India’s first 500-km-long bullet train project, with the help of Japanese funds and technology.
Connecting Mumbai to Ahmedabad, the cost will be Rs 98,000 crore. The meeting on Tuesday was chaired by Prime Minister Narendra Modi, according to Reuters. The formal announcement is expected during Japanese Prime Minister Shinzo Abe’s visit that begins Friday.
The development comes as a setback for China, which had been aggressively pitching to partner India in building the planned 10,000-km network of bullet trains. China had recently bagged its first foreign bullet train project in Indonesia, beating Japan by offering easy finance and technical assistance.
The decision comes on the back of the recommendations of a panel headed by NITI Aayog Vice-Chairman Arvind Panagariya, which chose the low-cost funding proposed by Japan International Cooperation Agency (JICA) at less than one per cent interest rate apart from a commitment for technology transfer and local manufacturing for a specified period.
The Panagariya panel has said the Japanese Shinkansen system of bullet trains had the best safety record, with no fatalities and delays of less than a minute.
A ministry spokesperson refused to confirm the approval. “We have no official information,” he said.
India’s hopes from bullet trains have been marred by the experience of Taiwan, which has been operating a high-speed train service based on Japan’s Shinkansen bullet train system since 2007. Saddled with huge losses – owing to high depreciation and interest payments and low ridership numbers – the operator has sought a bailout by the government to turnaround the troubled business, the Nikkei Asian Review has said last month.
JICA, which had offered to fund 80 per cent of the cost of the Mumbai-Ahmedabad project, had submitted a feasibility study in July for the high-speed corridor that is expected to cut travel time to two hours from seven.
The Japanese loan of over Rs 78,000 crore will come with a 50-year tenure, along with a moratorium of 15-years.
China was also awarded the contract for a similar feasibility study for the 2,200-km Delhi-Chennai corridor in September. Also, an India-China consortium is conducting a separate feasibility study for the 1,200-km Delhi-Mumbai corridor. Apart from improving speed on existing tracks, China is also training Indian Railways engineers in heavy haulage and setting up a rail university.