Govt to decide on FDI policy in railways soon

• The Department of Industrial Policy and Promotion (DIPP) has proposed to allow 100 per cent Foreign Direct Investment (FDI) in high speed train systems, suburban corridors, high speed tracks and freight lines connecting ports and mines.
• At present, there is a complete ban on any kind of FDI in the railways sector except mass rapid transport systems.
• As per the proposal, foreign companies would be allowed to pick up 100 per cent stake in the special purpose vehicle that will construct and maintain rail lines connecting ports, mines and industrial hubs with the existing rail network.
• The Home Ministry and the Department of Economic Affairs have sounded a note of caution on the proposal, citing security concerns, especially with regard to investments from China in this sensitive sector.
• Caveat on cards: Railway FDI policy to have a special caveat on Chinese firms; the home ministry has supported FDI in railways’ construction and maintenance segments but cautioned against investment by Chinese firms
• Rationale: Ministry says China is considered India’s rival in the economic and military fields and there are unresolved border disputes with it
• Out of bounds: Chinese investment may not be allowed in sensitive and core areas because that might pose danger to national security; so, J&K, the Northeast and Sikkim could be out of bounds for these companies
• Limited labour: Chinese labourers and technicians may be barred from working in areas along India’s border with China and Pakistan. Permission likely only after government’s approval and proper visa procedures.