Foreign Investment in Rail Infrastructure

Press Note No. 8 (2014 Series)

In terms of the FDI Policy, foreign investment is prohibited in railway transport, except Mass Rapid Transport System (“MRTS”).

Mr. Pankaj Singla
Sr. Associate
+919971508320
pankaj@indiacp.com
The Government of India, vide notification S.O. 2113(E) dated August 22nd, 2014, has amended the list of industries reserved for public sector and has allowed domestic as well as foreign investment in rail infrastructure. Accordingly, DIPP vide Press Note no. 8 (2014 Series) dated August 27th, 2014, has amended Para 6.1 of the FDI Policy and permitted flow of foreign investment in the railway transport sector in construction, operation and maintenance of:
  • Suburban corridor projects through PPP; 
  • High speed train projects; 
  • Dedicated freight lines; 
  • Rolling stock including train sets and locomotives/coaches manufacturing and maintenance facilities; 
  • Railway electrification; 
  • Signalling systems; 
  • Freight terminals; 
  • Passenger terminals; 
  • Infrastructure in industrial park pertaining to railway lines/sidings including electrified railway lines and connectivities to main railway line; and 
  • Mass rapid transport systems. (“Prescribed Activities”) 
FDI in rail infrastructure in the Prescribed Activities will be permitted up to 100% under the automatic route. If the investee Indian company is engaged in sensitive areas from security point of view, then FDI proposal in such companies beyond 49% will be considered by the Cabinet Committee on Security (“CCS”) on a case to case basis.

In view of the fore stated amendment, a new Para is inserted below Para 6.2.16 of the FDI Policy in the form of a table indicating the said amendment.

Further, Para 6.2.12 of the FDI Policy, ‘Industrial Parks’, has been amended to include in the definitions of “infrastructure” and “Common Facilities”, the railway line/sidings including electrified railway lines and connectivities to the main railway lines. In terms of the FDI Policy, FDI in Industrial Parks is permitted up to 100% under automatic route.
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