DIPP says all security issues raised by Home Ministry resolved

The Union Cabinet is likely to take up new norms for liberalising the foreign direct investment (FDI) regime in Railways as all security-related concerns raised by the Home Ministry have been addressed.

“The Cabinet should be taking up the matter in its next meeting or the one after. All issues raised by the Home Ministry on security aspects have been addressed,” a senior official of the Department of Industrial Policy & Promotion (DIPP) told Business Line.

The DIPP has proposed 100 per cent FDI through automatic route in the cash-strapped railways sector. It has been proposed that foreign investment be allowed in suburban corridor, high-speed train systems and dedicated freight line projects implemented in the PPP (public private partnership) mode.

But, FDI will not be allowed in areas related to train operations and safety.

The proposal suggests that companies should be allowed to pick up 100 per cent stake in the special purpose vehicle (SPV) that will construct and maintain rail lines connecting ports, mines and industrial hubs with the railways network.

The idea is to provide “first-to-last-mile” connectivity to ensure smooth movement of goods from the source (like mines) to ports.

The Home Ministry, in its comments to the DIPP on the proposed liberalisation of Railways, cautioned against allowing Chinese investments in Railway projects in sensitive border areas that may pose a security risk to the country.

It has suggested that a Core Group be set up with technical and security expertise to evaluate FDI proposals to ensure that such investments do not compromise the country’s security. “What the Home Ministry has suggested is feasible. We have spoken to other Ministries including Railways and there won’t be any problems in implementing it. Security is of paramount importance to the country,” the official said.

It has been suggested that a core group be formed that would examine proposals on a case-to-case basis to ensure that security concerns are not breached.

(This article was published on March 2, 2014)
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