India’s cabinet has cleared a $14.7 billion (£9.8bn) Japanese proposal to build its first bullet train line, an Indian government minister and official said on Thursday (10), one of India’s biggest foreign investments in its infrastructure sector.
The decision ahead of Japanese prime minister Shinzo Abe’s visit beginning on Friday gives Japan an early lead over China, which is also bidding to build high-speed rail lines across large parts of India’s congested and largely British-era system.
Japan had offered to finance 80 per cent of the cost of the train linking financial capital Mumbai with Ahmedabad, the commercial centre of Indian prime minister Narendra Modi’s home state of Gujarat, at an interest rate of less than one per cent.
“It’s been done,” a government minister who attended the cabinet meeting headed by Modi late on Wednesday said.
An official in Modi’s office confirmed the decision, saying there were some issues relating to the bullet train but that had since been sorted out in time for Abe’s visit.
“We expect to make an announcement during the visit,” the official said. Both the minister and the official declined to be identified.
Modi and Abe have forged a strong relationship, seeking to expand commercial and defence ties and push back against the rising influence of China across Asia.
Japan’s International Cooperation Agency completed a feasibility study in July on the 505-km (315-mile) Mumbai-Ahmedabad corridor offering to cut travel time to two hours from the current seven to eight hours.
China was in September given the right to assess the feasibility of a high-speed train link between Delhi and Chennai, in the south, after getting clearances from India’s security agencies wary of Chinese involvement in infrastructure areas such as telecoms and railways.
French and Spanish firms are also conducting studies into building two of the routes in a quadrilateral of high-speed train lines criss-crossing the country that would drastically reduce travel times.
A railway official said a panel led by Modi’s adviser, Arvind Panagariya, had cited the accident-free record of the Japan’s high-speed trains in its recommendation.
Lured by the scale of India’s transport needs, foreign rail companies are aggressively campaigning to sell their technology and steal a march on rivals.
However, the government has not said how it would pay for the new lines if they eventually get the green light.
India’s vast rail network runs 12,000 trains a day, carrying 23 million people and connecting about 8,000 stations, but has suffered decades of neglect at a time of rapid economic growth during which car ownership has surged and low-cost airlines have mushroomed.
Modi’s government said last year it would open up the railways to foreign investment as they struggle to win back freight traffic lost to roads, coastal shipping and planes.
Last year an Indian passenger train set a new national speed record of 160 kilometres an hour (100 miles an hour) – just half the speed of 320 kilometres an hour that the Japanese shinkansen can reach.