New Delhi: Even as China is bidding for the Delhi Mumbai Route, Japan aiming to short change its main rival, has offered to finance India’s first bullet train, estimated to cost $15 billion, at an interest rate of less than 1 per cent, officials said. Japan, which was mandated to assess the feasiblity of building the 505-kilometre corridor linking Mumbai with Ahmedabad, the commercial capital of Prime Minister Narendra Modi’s home state, has concluded that it is financially viable and has offfered to fund it through a soft loan, making it a front runner when it goes to tender, as it is bound to do.
Japan’s decision comes in the wake of comes in the wake of it losing out to China on the contract to build Indonesia’s first fast-train link.
Beijing offered $5 billion in loans without asking for guarantees, an Indonesian official said, ending a months-long battle to build the line linking Jakarta with the textile hub of Bandung.
Last month, China won the contract to assess the feasibility of a high-speed train between Delhi and Mumbai, a 1,200-km route estimated to cost twice as much. No loan has yet been offered.
“There are several (players) offering the high-speed technology. But technology and funding together, we only have one offer. That is the Japanese,” said AK Mital, chairman of the Indian Railway Board, which manages the network.
The two projects are part of a ‘Diamond Qaudrilateral’ of high speed trains over 10,000 km of track that India wants to set up connecting Delhi, Mumbai, Chennai and Kolkata.
Japan has offered to meet 80 per cent of the Mumbai-Ahmedabad project cost, on condition that India buys 30 per cent of equipment including the coaches and locomotives from Japanese firms, officials said.
Japan’s International Cooperation Agency, which led the feasibility survey, said the journey time between Mumbai and Ahmedabad would be cut to two hours from seven. The route will require 11 new tunnels including one undersea near Mumbai.
“What complicates the process is Japanese linking funding to use of their technology. There must be tech transfer,” said Mital.
JICA declined to comment on the details of its offer. “The report has already been handed over to India, and the Indian government is now in the process of making a consideration,” a spokeswoman said.
Toshihiro Yamakoshi, counsellor in the economic section of the Japanese embassy, said Japanese companies were keen to collaborate with their Indian counterparts on the rail project as part of Modi’s Make-in-India programme. He said it was too early to provide details of the cooperation.
India’s cabinet will take a decision on the Japanese proposal over the next few weeks, an Indian railway official said. He said there were lingering concerns about whether the billions of dollars required for high-speed rail might be more usefully spent in modernising the railway system.
“There is a lot of money involved in this. The different departments are weighing the implications. Should we be committing all our resources to a single high-speed line,” the railway official said on condition of anonymity.”
“The railways have not attempted anything as big as this before in terms of costs,” the official said.