Indian Railways Proposes Reforms to PPP Policy to Reduce Investor Risk

The Indian Railways has proposed amendments to its decade-old PPP policy with the objective of reducing project risks and providing greater certainty in the recovery of private investments.

Key Policy Changes Proposed:

1. Concession Period: Under the existing PPP framework introduced in 2012, concession periods for railway infrastructure projects generally range between 20 and 35 years. Such tenures have often been viewed as insufficient for private developers to recover the significant capital investments typically required for railway infrastructure projects. The Railways has therefore proposed extending the concession period to 50 years, which is expected to provide investors with a longer revenue window and improve project viability.
2. Land Acquisition Responsibility: The proposed policy revisions also address risks associated with land acquisition. Under the current framework, while the Railways undertakes the process of land acquisition, the cost of acquiring land is borne by the private partner or the special purpose vehicle (SPV) established for the project. The revised framework proposes that Indian Railways will assume responsibility for both the land acquisition process and the associated costs, thereby reducing a significant risk currently borne by private developers.

The proposed reforms come at a time when Indian Railways has identified 15 infrastructure projects valued at approximately Rs. 35,800 crores to be implemented under the PPP model by March 2028. These projects include the construction of new railway lines, doubling of tracks, and redevelopment of railway stations.

The proposed amendments reflect an effort to address key investor concerns relating to investment recovery timelines and land acquisition risks. If implemented, the revised PPP policy may enhance the attractiveness of railway infrastructure projects for private developers and facilitate greater private investment in the expansion and modernisation of India’s railway network.