Welcoming talks of foreign direct investment (FDI) in the railways sector, Umesh Chowdhary, managing director, Titagarh Wagons says the sector will benefit from more interest and investment.
Speaking to CNBC-TV18, Chowdhary says the existing FDI that is allowed in railways does not permit inflows in component manufacturing.
“However, for infrastructure, the talks are the FDI will be opened up to 100 percent for dedicated freight corridor and the high speed railway network which has been long spoken about will be very good,” he further adds.
Below is the edited transcript of Chowdhary’s interview to CNBC-TV18.
Q: There are some reports doing the rounds that there could be a change in the FDI policy for railway. Can you just take us through what the current FDI norm is for railway and what the industry would like it to be changed to?
A: What we understand is that the FDI has not been permitted in railway infrastructure, it has been permitted in some component manufacturing. However, for infrastructure, the talks are the FDI will be opened up to 100 percent for dedicated freight corridor and the high speed railway network which has been long spoken about.
About 74 percent for the other railway infrastructure like the railway tracks for the feeder lines, equipment manufacture, etc will be very good.
Policies like R3i which was for the last mile connectivity has not really gained momentum essentially on account of lack of adequate capital availability and if FDI is opened in those there is a hope that there will be more and more interest and investment that will come into this sector.
Q: How much has come in terms of FDI in equipment manufacturing since that was opened earlier? Is the return clement enough for people to invest in railway infrastructure?
A: I would not be able to give you the exact number of the FDI that has come into equipment manufacture, but I would guess that it will not be very significant. Except for some companies like Bombardier and Alstom who have set their shops in India, I cannot recollect at the top of my mind about many FDIs having come in, because the opportunity also was very limited as such.
Equipment will follow the infrastructure available otherwise the demand for the equipment will not grow. As far as the return on investment is concerned, these are infrastructural returns, so you cannot have a payback of 5 years or 3 years or 4 years, but then railway inherently would be a very, very rewarding sector, because if you really look at anywhere in the world whether it is in America or anywhere else, the railway infrastructure investment by private sector has yielded great dividend.
Q: So you are confident that FDI can come in if the sector is indeed open?
A: Absolutely. The only thing which I do have a word of caution in my mind is that it has to be a wholehearted effort. We saw the container train operator's scheme etc. coming in, like PPP schemes which was the prelude to the FDI being opened, we cannot hold back on it and see them as competitors. It has to be more friendly, it has to be more open and then only the real benefit of the FDI or PPP will be seen.
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