India may give second high-speed rail contract to Japan

| November 2, 2016


NEW DELHI: India is exploring a proposal to award its second highspeed rail contract to Japan and the two sides would work on it during Prime Minister Narendra Modi’s two-day visit to the country starting November 11.

This could be Japan’s second such project in India, just like the first high-speed rail link, which is based on the Shinkansen bullet train train technology and is proposed to connect Mumbai with Ahmedabad, indicated people familiar with the developments.

Sources told ET that Tokyo is likely to fund the project just like the first high-speed rail link. Indian and Japanese officials are discussing the proposal, including the route for the second high-speed rail link, which is expected to be built in southern or central India. Japan is keen to expand the highspeed rail network in India and the goal fits well with the Narendra Modi-led government’s stated agenda of revolutionising the time taken for train travel in India.

Japan, which has decades of expertise in developing and running highspeed rail networks, will be key to the government’s plan, according to people familiar with the subject. The agreement for the first link was signed in December last year during Japan’s Prime Minister Shinzo Abe’s visit to Delhi. Engineering design work for the link, which includes a number of tunnels and bridges, is expected to start in December and the network is expected to be ready by 2023-24. The government has said that tariffs on this route will be less than the airfare.

Japan is providing financial assistance for the project in the form of a loan of up to 81% of the cost at a nominal interest rate of 0.1% per annum. This loan has to be repaid in 50 years with a 15-year moratorium. The Indian Railways has identified at least five other corridors — Delhi-Mumbai, Mumbai-Chennai, Delhi-Kolkata, Delhi-Nagpur and Mumbai-Nagpur — for running 300 kmph or higher speed trains. Feasibility studies are being conducted for these routes. Besides Japan, China is also in the reckoning for developing highspeed rail networks in India.

ET View: Railways Must Keep Off
High speed train travel for short distances between nearby towns makes sense. India should negotiate a loan on extremely favourable terms with Japan for this project as well, and more so if it is tied aid. But the Railways should not waste resources on the project and add to its debt burden. The project must be open to private sector which can take risk based on an assessment of its commercial viability. The Railways’ focus should be to modernise the rail network, and not get side-tracked.

Category: Indian Railways, News

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