Asia’s oldest network open for private investment, operations . . .
For the first time, India’s Ministry of Railways is asking private investors to express their interest in running passenger trains on Indian Railways, the world’s fourth-largest network. According to Indian Railways, the move will allow private players to operate passenger services for more than 100 routes across the country. The move has the potential to introduce state-of-the-art technology in train operations and attract private sector investment of about C$5 billion. Getting private companies to invest is crucial for Prime Minister Narendra Modi amid a weakened economy. Still, some industry experts have raised concerns, particularly surrounding the implementation and regulation of both the bidding and operations.
One of the world’s largest privatizations . . .
According to Indian Railways, this initiative aims to introduce modern technology and reduce transit times. Running private passenger trains on Indian Railways would give investors access to a major market, which moves 23 million people daily, as well as three million tonnes of freight, and is the world’s eighth-largest employer, making it central to India’s society and economy. But the specifics of each route could pose challenges to investors hoping to make a profit while ensuring that fares are accessible to broad swathes of the population.
Is Canada late for this train?
The move may be ill-timed for Canada. In January, Indian officials flagged the Indian arm of Canada’s Bombardier and France’s Alstom SA as among the prospective bidders. But Bombardier’s global rail operations are now waiting on regulators and shareholders to approve its sale to Alstom SA, making any potential win by Bombardier a hollow one for Canada. Bombardier would appear well-placed to present a strong bid, with years of experience in India, and major contracts for the Delhi, Mumbai, and Indian Railways networks already in place. Asia’s rail ridership is forecast to continue growing, with mounting pressure to expand networks to stimulate economies. But Canadian investors may enter into the Indian rail business in other ways: Quebec’s publicly-owned pension fund, Caisse de dépôt et placement du Québec, is Bombardier’s major shareholder and among a number of Canadian funds leading major acquisitions in the Asia Pacific’s transport sectors, especially in India.
- Asia Pacific Foundation of Canada: Understanding Asia in 2030 and the implications for Canadian transportation policy
- Financial Express: India’s first private train on Indian Railways network to hit tracks by this year; details
- NDTV: Indian Railways finally seeks private money to run trains. What it means