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Budget 2014-15 – 100% FDI in Railways and 49% in Defense

This week on wed , cabinet has cleared long delayed proposal for raising FDI limit in defense to 49 percent and fully opened up the railway infrastructure segment, like high-speed trains, for foreign investment.These proposals were pended from several years.
FDI ceiling in the sensitive defense sector has been hiked to 49 percent from current 26 percent, with the condition that of the control in joint venture manufacturing defense equipment will remain in Indian’s hands.The move is aimed at boosting domestic industry of a country which imports up to 70 percent of its military hardware.

The Cabinet also approved a proposal to open up cash-strapped railways to foreign investment by allowing 100 percent FDI in areas such as high-speed train systems, suburban corridors and dedicated freight line projects implemented in PPP mode.However,FDI will not be allowed in train operations and safety.

On Thursday, the government said foreign investment in railways will help in strengthening infrastructure and asserted security will not be compromised. Overall the control would be with the railways, ownership being with the railways and essential operations being kept with in the railways. Getting FDI, would help in speeding up lots of handicaps which the railways is facing because they are unable to finance that and therefore it was taken as a conscious decision.

With the FDI nod with regard to the railways, the proposed Mumbai-Ahmadabad high speed rail corridor is expected to get a push. The construction of exclusive rail corridor for freight movement is also likely to be boosted.

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