India, Japan to sign pact for dedicated freight corridor

India and Japan are likely to sign an agreement for the first tranche of ¥9 billion, or about Rs 454 crore of the main loan, to fund the dedicated rail freight corridor on March 30.

This is over and above the ¥2.6-billion loan signed under the engineering services agreement in December 2009.

The engineering services loan will be used to prepare and draw up designs of the project and structure the bid documents. The loan will be disbursed by JICA to the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL) on an “as and when required basis” over fiscal 2010-11 and 2011-12.


Japan has agreed to a ¥450-billion tied-loan to fund the western corridor of about 920 km to be built between Rewari and Vadodara.

According to the terms of the tied-loan, 30 per cent of the amount will have to be spent on procuring equipment from Japan.

The engineering services consultant, who will advise the Railway Ministry on the procurement process from Japan, is likely to take about six-eight months.

So, the need to use the main loan is unlikely to arise before the last few months of 2010-11, explained an official source.

The amount will be spent for sourcing locomotives from Japan.

Route alignment

The Railway Ministry, meanwhile, has asked Dedicated Freight Corridor Corporation of India Ltd to change the route alignment of the freight corridor at certain places to avoid acquiring land from owners not willing to part with their land.

The move, backed by the Union Railway Minister, Ms Mamata Banerjee’s “no forceful acquisition” policy, has put the Railway officers in a bind.

“The issue is even if the Railways were to finalise a new alignment, what is the guarantee that all owners along the new alignment will agree to part with their land,” pointed out a Ministry official.

Officials are yet to ascertain the extent to which this exercise will hit the project in terms of change in route length and cost.