Sectoral Guidelines for Domestic/Foreign Direct Investment in Railways

To augment capacity, modernize and bring efficiency through technology up-gradation on Indian Railways network and to generate finances for undertaking these activities from both domestic and foreign investors.
General Guidelines:
i. These sectoral guidelines pertaining to FDI complement the existing FDI guidelines issued by Department of Industrial Policy and Promotion.
ii. These sectoral guidelines pertaining to FDI do not override any laws/ /regulation/rules issued by other Government Departments regarding Rail projects unless expressly specified in these guidelines or in any of the Concession/Contract agreements pertaining to specific Rail Projects.
iii. Ministry of Railways (MoR) reserves the right to verify the antecedents of the foreign collaborators and domestic promoters including their financial standing and credentials in rail or related sector.
iv. Adequate safety and security procedures should be in place during project implementation and operation.
v. No unfair practices leading to unfair competition can be adopted by Investors.
vi. Holistic approach must be followed to ensure that the complete rail system – all components rail, traction, rolling stock, signaling are compatible to ensure efficient and safe train operation and achieve the objective.
vii. Projects involving public carriage of passenger would require safety certification from Central government or its authorized entity before it is commissioned.
viii. For rolling stock operating on IR network, Inspection and Safety Certification will be done by MoR or its authorized entity.
ix. FDI beyond 49% of the equity of the investee company in sensitive areas (border areas) from security point of view, will be brought before the Cabinet Committee on Security (CCS) for consideration on a case to case basis.
x. Project proposals for Domestic/Foreign Direct Investment in Railways (except where no administrative approval is required) can be submitted to Adviser(Infrastructure), Railway Board by Investor/Customer/Zonal Railway along with a brief concept note including objective, scope, benefits, market potential, tentative project cost, probable financing options, pricing and economics for consideration of Railway Board.
xi. PPP Cell along with concerned Directorates will assess the technical and financial viability of the proposal, if felt necessary, with the help of consultants. If the proposal is found fit to proceed further, the concerned Zonal Railway/customer/ investor will be advised for further necessary action. For Projects under Joint Venture (JV) models of the Participative policy 2012, “In principle approval” will be granted by Railway Board.
xii. All Projects of rail connectivity’s under NGR model of the participative policy 2012 will be granted “in-principle approval” by Railway Board. General Manager of concerned Zonal Railway will appraise and approve the project for rail connectivity with existing IR network under advice to Railway Board.
xiii. In case any project involves adoption of transparent bidding route, the Zonal Railway will get the Project Feasibility Report along with the Detailed Estimates of the Project prepared. Railway Board will undertake market survey, traffic forecasting and financial modeling including identification of risks and risk mitigation measures through an independent financial consultant.
xiv. Model documents [Request for Qualification (RFQ), Request for Proposal (RFP) and Concession Agreement (CA)] for each type of Project will be prepared by Railway Board. Project specific documents (RFQ, RFP & CA) would be prepared by Zonal Railway based on the model documents approved by Board.
xv. For Projects pertaining to building rail connectivity’s through Non Governmental model (Private Line), through Joint Venture and through Customer Funding under the Participative Model Policy of December 2012, no bidding is required. For NGR and JV projects the project developer/JV will submit the Feasibility Report along with Bankability Report. Final Approvals for such projects will be based on such reports.
xvi. After necessary technical and financial due diligence the project would be appropriately structured (under various PPP models) by PPP Cell of Railway Board. Entire bid process management including issue and finalization of RFQ / RFP will be done by Zonal Railways.
xvii. If the project requires VGF, the approval of Ministry of Finance (Department of Economic Affairs) would be taken through PPP-AC procedure by PPP Cell of Railway Board.
xviii. The concessionaire selected would be free to establish SPVs and bring FDI.
xix. The monitoring of the approvals of the projects at different levels will be coordinated by Advisor (Infrastructure), Railway Board.
xx. FDI is not permitted in Rail Operation except in the activities listed in Annexure-I where it is specifically mentioned. Annexure-I provides the permissible activity under each potential area along with limits of FDI and salient features. Annexure-II provides a list of potential projects.

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