July 21, 2015

Japan offers low-interest loan for Indian HS line

Written by  Raghav Thakur
  • Print
  • Email

THE Japanese government has offered to fund the construction of India's first high-speed line linking Mumbai with Ahmedabad provided 30% of the rolling stock is supplied by Japanese companies.

Japan has offered a loan with an interest rate of just 0.25%, even though the cost of the project has increased from an initial estimate of Rs 650bn ($US 10.2bn) to Rs 988.05bn, according to a study completed recently by the Japan International Cooperation Agency (Jica). A final report by Jica is due to be submitted next month.

A financial rate of return of 4% and an economic rate of return of 12% have been projected for the project, which will have an estimated ridership of 40,000 passengers per day.

India’s railways minister promised “swift and appropriate follow up action” following receipt of the Jica feasibility study and he is expected to make a detailed statement on India’s high speed plans during the current session of parliament.

The project is likely to be implemented by Indian Railways’ subsidiary, Rail Vikas Nigam (RVNL) and its subsidiary, the High Speed Rail Corporation (HSRC). Jica has recommending building the line as a standard-gauge railway rather than using India’s 1676mm-gauge.

If construction of the 505km line starts in 2017, it could be completed in 2023 and opened the following year. A journey time of two hours is envisaged compared with a fastest time of 6h 45min today.

China is also believed to have offered funding for the project.

Get the latest rail news

IRJ Rail Brief newsletter covers global railway news