Could China Save India's Railways?

By Ankit Panda

November 25, 2014

Chinese state-owned firms will conduct a feasibility study for Chinese high-speed rail infrastructure in India. 

In line with recent trends, China is examining the possibility of exporting its high-speed rail technology to India. Specifically, according to Reuters, China will carry out and finance a feasibility study in India for a potential high-speed rail project linking the country’s capital New Delhi with the southern city of Chennai. A spokesperson for the Indian Ministry of Railways made the announcement on Tuesday. The move comes at a time when high-level diplomacy between India and China has focused heavily on expanding economic cooperation between the two Asian giants, who cooperate despite looming geopolitical rivalry and mistrust. China is approaching India on the issue of high-speed rail technology after having made similar bids to Malaysia, Thailand, Myanmar, Mexico, Turkey and Saudi Arabia. Only the latter two countries have awarded China contracts; an initial contract in Mexico was withdrawn.

The Indian Ministry of Railways announcement revealed no specifics about a cost estimate for the high-speed rail line, which would be 1,750 km long. The Reuters report notes that a much shorter (500 km) line between Mumbai and Ahmedabad is estimated to cost 600 billion rupees or $9.7 billion according to a similar feasibility study by Japan International Cooperation Agency (JICA). Japan is a major contributor to other Indian infrastructure projects, including the Delhi-Mumbai Industrial Corridor (DMIC). Japan has been pushing for India to adopt its Shinkansen bullet train technology for the Mumbai-Ahmedabad corridor.

Should the Chinese feasibility study prove positive, the Indian government could make good on promises to improve the country’s aging rail infrastructure — Indian Prime Minister Narendra Modi has stated his desire to overhaul India’s lagging railway infrastructure and institute a “diamond quadrilateral” better connecting the country’s four major cities (New Delhi, Mumbai, Chennai, and Kolkata). However, as The Diplomat noted earlier this year, despite the continuing economic relevance of national railways in India, Indian rail networks run at a loss. This drove the government to increase fares for both passengers and freight, causing considerable criticism. Foreign investment into improving the quality of Indian railways could draw the attention of the current government, which is more open to the prospect of privatizing portions of India’s poorly maintained and underdeveloped rail networks.

Based on current reports, a group of five Indian officials will conclude a deal with their Chinese counterparts this week to initiate the feasibility study. The study itself will be carried out by China National Railway Administration and China Railway Construction. The agreement will follow on the heels of a Memorandum of Understanding (MoU) on railway development signed during Chinese President Xi Jinping’s trip to India in September. In terms of broader India-China diplomacy, this railways agreement represents a step in maturing economic relations between the two countries. The new Indian government under Narendra Modi has shown remarkable pragmatism in expanding economic relations with India’s neighbors. With this deal with China, Modi faces the prospect of a twofold coup: improving India’s railways and developing India’s economic relationship with China.