FDI in railways covered from almost all aspects that me and my friends could find. Hope it would come to use for other presenters

1. FDI IN RAILWAYS

2. FDI-FOREIGN DIRECT INVESTMENT
 Foreign direct investment (FDI) is a direct
investment into production or business in a country
by an individual or company of another country, either
by buying a company in the target country or by
expanding operations of an existing business in that
country.
 Broadly, foreign direct investment includes "mergers
and acquisitions, building new facilities, reinvesting
profits earned from overseas operations and intra
company loans".[1] In a narrow sense, foreign direct
investment refers just to building new facilities

3. FDI AND FII
 FDI
 . FDI is an investment that a
parent company makes in a
foreign country.
 FDI is quite different from it as
they invest in a foreign nation
 FDI, this is not possible.
 FII
 FII or Foreign Institutional
Investor is an investment
made by an investor in the
markets o
 In FII, the companies only
need to get registered in the
stock exchange to make
investments f a foreign nation.
 The Foreign Institutional
Investor is also known as hot
money as the investors have
the liberty to sell it and take it
back

4. .
 FDI only targets a
specific enterprise. It
aims to increase the
enterprises capacity or
productivity or change
its management
control.
 The FII investment flows
only into the secondary
market. It helps in
increasing capital
availability in general
rather than enhancing
the capital of a specific
enterprise

8. Low cost BUT Qualified, Educated/skilled labor pool.
 Long-term market potential OR yields greater than can be achieved
Domestically.
 Access to natural Resources.
 Geography.
 Stability of the economic and political Environment.
 Size of the market.
 Legal and regulatory Framework.
 Access to basic inputs.
 Cost Factors.
 Market Factors.
 Infrastructure and technological Factors.
 Political and legal factors.
 Social and cultural factor.

9.  Raising the level of Investment
 Up gradation of Technology
 Improvement in export Competitiveness
 Employment Generation
 Benefits to consumers
 Revenue Generation
 Economic Growth
 Improved consumer welfare through reduced costs,
wider choice and improved quality
 Access to new market/distribution channel for
products
 Competitive advantage and innovation.

10. FDI TREND IN INDIA
Actual Previous Highest Lowest Dates Unit Frequency
2203.00 2133.00 3290 -60.00 2013 -
2014
USD
Million
Monthly

11. FDI IN RAILWAYS
Neel Shah

12. FDI – The Need
Railway finances are stressed, and it needs massive investment to
modernise, improve safety and play a role in globalising India’s transport
infrastructure. Allowing foreign investment for building and maintaining, say,
new rail lines, will help speed up such projects. The government already
allows 100% foreign investment in metro rail projects and there is no
reason why this should not be extended to the Railways. FDI must be
welcomed in most sectors, though it’s not the key to solving all problems of
the Indian economy.
That role has to be played by domestic investment. Projects must be
cleared fast, and public investment stepped up to revive the economy. So
far, the private sector has been chary of investing in long-gestation railway
projects. The Railways should engage with them. But investors need clarity
on the scope and terms of the contracts in public-private partnership
projects. It will make compliance easier.

13. FDI – The Need
According to information available, rail wagons are designed to carry a load of pre-defined
capacity plus nine tonnes with leeway to load one more tonne without any
overload penalty across the entire railway network, as per the interim budget,
presented recently.
The average load carried per wagon is about 62 tonnes though some wagons
carry about 67 tonnes. As per a railway official, as reported in the press, a capacity
creation of 15 million tonnes (mt) will account for about 30% of the 50 mt
incremental loading that the railways aim to move during 2014-15. They have set
a target to achieve 1,101 mt of cargo to be moved in this fiscal year.
However, in order to carry higher load per wagon, the Railways need to invest in
wagons, improve rail tracks and bridges. For this purpose, Railways propose a
market borrowing of Rs12,800 crore against Rs14,000 crore last year, to procure
rolling stocks, including wagons, locomotives and coaches. Should the need arise,
they will revise the target and borrowing accordingly.

14. FDI – The Need
One of the biggest problems that Railways have faced continuously is the issue
relating to extension of rail-track laying, for which there are no indigenous technology
or capacity. In fact, worldwide, there are only a few companies who can do this job
meticulously and who are in great demand. The three principal companies are
reported to be Harsco Corporation of the US, ETF of France and China Railway
Shanghai Design Institute Group Company. The railway track laying machines are
manufactured by the above three major companies, who, on obtaining overseas
contracts, bring in their equipment, lay the track, complete their job on schedule, and
take back the equipment, to another location for a new assignment!
The Eastern Railway Freight Corridor, according to information available, there are
16 bidders, both Indian and foreign, but most of whom have taken supporting bids
from two of the above named specialists in the field. This corridor is likely to be
completed in four years' time after the award.
According to an official of the Railways, as reported in the media, there are 35,000
route Kms that cover 70% of rail lines engaged in carrying freight allow for higher
carrying capacity. The load per wagon will increase only by about 2 tonnes, as the
routes currently permit 2 tonnes less loads per wagon. But to do so, Railways will
have to make an incremental investment of Rs2,000 crore to replace old tracks and
engage in upgrades in some areas.

15. RAILWAY REVENUE

16. The Advantages
 The Railways’ plan is to allow foreign investors to hold stakes in the special
purpose vehicles for constructing port connectivity projects .a
 IT would help faster evacuation of raw materials. The private sector should be
involved, in a big way, to augment investment and step up freight volume and
revenue.
 Private entrepreneurship must also be roped in for projects such as high-speed
trains, modernizing stations and freight terminals.
 Railways owns large portions of the land on which it wants to build new lines or
install modern electronic signaling for high-speed operations.
 Increasing the capacity of the Railways will help lower India’s imports.
 Increased productive efficiency
 More Employment
 Consumer Benefits
 Increase in savings and investments

17. The Disadvantages
 Will affect current tariff and increased tariffs will lead to increase in overall cost of
living
 Profit distribution, investment ratios are not fixed
 Inflation may be increased
 Again India become slaves because of FDI
 critics have also raised concerns over the efficacy of purported benefits of direct
investments.
 While the levels of FDI tend to be resilient during periods of economic uncertainty,
it has the potential of adversely affecting the net capital flow of a developing
economy.
 FDIs generate negative externalities in the labor market of the host economy.
Why so?

18. The Disadvantages
Evidence shows that multinational companies do pay a slight premium over local-term
wages, but does this really benefit the host economy? Paying a premium for
the price of labour may improve the consumption power of workers, but it also has
the detrimental ability of disrupting the local employment market. When prices rise,
supply increases while demand falls. Similarly, when the price of labour increase,
wage premiums in this case, this creates a distortion and creates a disequilibrium
in the labour market. Job matching stops being efficient and may even create
unemployment.

19. FDI – The Way Forward
With these data in the background, it is hoped, that when the final directives are
outlined for the FDI in Railways, the following factors will also play a vital role in the
development:
a) to engage in serious joint venture discussions to actually start manufacturing the
track laying machinery in India itself - need and scope for continuous exists for a
few decades to come;
b) to have a separate joint venture with the same FDI (or the second company) to
take contracts for fresh track laying and to renew the old and worn out ones that
need to be replaced for improvement and safety;
c) to have a separate organisation only for maintenance and repairs of all railway
tracks in the country
d) current passenger coaches are mostly (almost 95-98%) in single decks only;
double-decker passenger coaches area novelty; since in many areas the traffic is
high, double-deckers would help faster movement
e) if Railways do not have a separate division for procurement of land in the
proposed areas for laying tracks and stations, this should be established as a
separate entity

20. MAJOR SECTORS
ATTRACTING FDI

21. FDI IN RAILWAYS
 The government is moving swiftly to allow foreign direct
investment in railways to upgrade infrastructure for freight
and high-speed trains.
 The commerce and industry ministry has initiated the
exercise to allow 100% FDI in several segments of railways,
moving beyond its earlier plan to open select sectors such
as high-speed train systems, dedicated freight lines built
through the public-private partnership route and in certain
areas of suburban rail networks.

22. FDI IN RAILWAYS
 Currently, there is a complete ban on any kind of FDI in
railways, except mass rapid transport systems.
 High-speed trains and dedicated corridors are top agenda
items for the BJP government and the intention to upgrade
infrastructure was officially announced by president Pranab
Mukherjee in his address to the joint sitting of both Houses
of Parliament.

23. FDI IN RAILWAYS
 Railway minister Sadananda Gowda has said on it needs
Rs 5 lakh crore for modernization, a large chunk of which
will come from the private sector.
 Sources said the draft note is for discussion and a final
proposal will be moved after consultation with other
ministries, led by the Railways.
 In its election manifesto, the BJP has committed to
modernize and upgrade railways and launch Diamond
Quadrilateral project of high-speed train network.

24. FDI IN RAILWAYS
 In her first interview to any newspaper, commerce &
industry minister Nirmala Sitharaman had backed the
move. "Railways is desperate for investment. It needs
money for expansion. It needs money for safety. It needs
money for modernization and for railways the quantum of
investment that you need India cannot suffice, so FDI
would be a very good opportunity.”

25. IMPACT OF FDI IN RAILWAYS
 Joint ventures stocks and funds are
very promising for Indian
companies at present.
 There are lots of technologies
needed for upgradation of the
infrastructure in India, especially
with respect to high-speed trains.
Then you would require high-speed
infrastructure corridors as the new
railway engines are of high capacity.

26. IMPACT OF FDI IN RAILWAYS
 Then in railway engine manufacturing and safety
equipment, there are very few companies in India. With
foreign players coming in, there will be a flood of
technology into India.
 Railways are very important for the country; they are the
economy mover. If the railways are not able to move the
economy, I do not think India can make good progress.

27. FDI – The Way Forward
All these and more and innovative ideas will take at least a decade or more to
accomplish, but it is time we set the goals right and focus to reach those
objectives. Just in passing reference may be made that a few years ago, these
track laying machines cost between Rs10 crore and Rs30 crore, and why these
were not purchased by the Ministry of Railways is a serious issue that they can
only answer, since these would be more expensive now. But it is never too late to
buy the latest and most modern equipment available, to get the job done!

28. Prospective buyers in railways
 General Electric Co, the world's largest maker of diesel locomotives, said it
would prefer a public-private partnership to make locomotives with Indian
Railways for new projects, but despite a lot of discussion, "progress has
been very slow".
 The US company said it would welcome any steps to open India's railways
to foreign investment.
 "Any fresh impetus to expedite private sector participation on existing
project plans, as well as new areas, would be a welcome step in the right
direction," said Nalin Jain, South Asian business leader for GE's
transportation unit.
 GE, which has operated in India since 1902 and has nearly 15,000
employees there, said it has submitted a formal proposal to manufacture
locomotives in India and was also trying to sell its train signalling and speed
control products for various subway projects around the nation.

29.  Companies such as Canada’s Bombardier, General
Electric of the US and Germany’s Siemens have
already shown interest in investing in India. Chinese
companies such as CSR Corp Ltd and Japanese
manufacturers that already supply hi-tech equipment
to the railways are other potential investors.
 Railway ministry officials expect interest from Chinese
firms such as CSR Corp Ltd (601766.SS), Germany's
Siemens, as well as Japanese manufacturers that
already work in India as contractors and suppliers to
the railways.
 The proposal was greeted enthusiastically by
Canada's Bombardier, which in 2008 set up a 33
million euros factory in Gujarat state to build trains for
Delhi Metro and plans exports to other Asian markets.

30. WHY FDI ?
 Railways have been running short of cash as the
populist polices of the government do not permit any
increase in passenger fares while the number of
loss-making passenger trains is increased every
year to win votes. For 2012- 13, railways posted a
loss of about 26,000 crore.
 Main earnings of the railways come from its
freight operations which crosssubsidise the
losses on running passenger trains.
 However, goods trains are made to wait to let
passenger trains pass as there are not enough
tracks to accommodate such a large number of
trains. As a result, the average speed of a goods
train has come down to 25 km per hour.

31.  While the railways had a market share of 65 per
cent in the goods movement of the country in
1986- 87, this has now come down to 30 per cent
while that of the road sector has gone up from 34
per cent to 60 per cent during this period. A mere
25 per cent of the investment in the railway budget
is financed through internal revenues of the vast
organisation. The rest of the investment comes
from government handouts and loans.
 The vast network of railways is therefore, in
desperate need of more funds.
 India has the world's fifth largest rail network, after
US, Russia, Canada and China. However, it is
lagging behind the others and has deteriorated
over the years due to heavy congestion of the
tracks and the failure to modernise.

32. HOW FDI CAN RESCUE RAILWAYS
??
 RESCUE PLAN
 RESCUE POLICIES
 FRAMEWORK OF POLICIES
 VARIATION ACCORDING TO
TIME

33. RESCUE PLAN
 PASSING OF PROJECT
PROPOSAL
 APPROVAL FROM
GOVERNMENT
 SEEKING INTEREST OF
COMPANIES
 SOME INTERESTED
COMPANIES

34. FRAMEWORK
 STRUCTURAL REFORM
 BETTER FUNCTIONING OF
RAILWAYS
 TRANSPIRANCY
 INCREASE IN EFFICIENCY

35. THANK YOU