Economy

Japan’s failure to push n-deal puts bullet train project on slow track

Mamuni Das Nayanima Basu New Delhi | Updated on January 20, 2018

BL14_PG1_TRAIN

$2-billion defence deal also in limbo, say sources

India’s ambitious high-speed rail project with Japanese participation appears to have gone onto a slow track, evidently becoming a casualty of a perceived lack of progress on New Delhi’s proposal for a civil nuclear technology deal with Japan.

The buzz in diplomatic circles has it that India is waiting for the Japanese Diet to approve the proposal to transfer civil nuclear technology before it moves ahead with the Ahmedabad-Mumbai bullet train project with Japanese participation.

When the high-speed train technology agreement was signed in December 2015, it was considered expensive even by developed country standards. But from India’s perspective, this was done with an eye to access Japan’s civil nuclear technology, an official told BusinessLine. For the ₹98,000-crore project, the Indian negotiating team thrashed out a 50-year loan of ₹79,000 crore from Japan at low interest rates and a long moratorium period.

But hurdles are cropping up on the high-speed train tracks. Maharashtra has stated that it cannot provide land at the Bandra Kurla Complex (BKC) in Mumbai for the project, and has asked the Railways to use its own land. However, having a railway station at Mumbai’s central business district — BKC — is considered important for the project from the perspective of attracting footfalls, explained an official. The Railways’ land is not optimally situated, being relatively farther away, the official added.

“The issue seems to be more of an ongoing diplomatic tussle between both countries than a purely business matter,” sources said.

It appears that problems started emerging when the Indian side got an indication that Japan will not approve the civil nuclear agreement, which had been touted as a major achievement by Prime Minister Narendra Modi during the visit of his Japanese counterpart Shinzo Abe here last December.

“India was hopeful that the pending civil nuclear deal will get the approval of the Diet. But that has not happened. It was unfortunate,” said a senior official involved in the matter. The last session of the Diet ended on June 1. In the Mumbai-Ahmedabad HSR corridor, a small portion lies in Maharashtra and the rest in Gujarat. Maharashtra wants cities like Nagpur and Nashik to be covered under the bullet train project. An official said that while there were issues, they would be sorted out since this is a pet project of the Prime Minister.

Meanwhile, Railway Minister Suresh Prabhu, who had maintained that the project will be ready by 2023, did not reply to questions on Maharashtra’s stance.

From all accounts, Japan is also “miffed” about the delay in the aircraft deal with India that was supposed to have opened up the defence market for commerce. The $2-billion deal envisages purchase of 12 ShinMaywa US-2 amphibious maritime surveillance aircraft from Japan for the Indian Navy.

The plan was to buy two of these aircraft off-the-shelf and for the remaining 10 to be co-produced under licence in India. The deal was to have been finalised by March. Through this deal, Japan was hoping to position itself as a leading defence exporter in Asia.

“Japan is banking on India for this landmark defence deal. But it seems it is stuck now,” said the source who is involved in the talks on the civil nuclear agreement.

Published on June 13, 2016

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like