Japan is expected to win the right to construct India’s first bullet train, after losing an Indonesian high-speed rail deal to China, the Nikkei business daily reported on Tuesday.
Japan will offer more than 1 trillion yen ($8.11 billion) in loans to construct India’s Rs 98,000 crore fast train, according to the report.
Japan recently lost the bid to build Indonesia’s first fast-train because Beijing provided a $5 billion loan without guarantees.
Japanese Prime Minister Shinzo Abe, due to visit India this week, and his counterpart Narendra Modi are expected to issue a joint statement on the deal, the Nikkei said.
Tokyo was picked to assess the feasibility of building the 505 kms (313 miles) corridor linking Mumbai with Ahmedabad, the commercial capital of Modi’s home state, and concluded it would be technically and financially viable.
Construction of the high-speed railway link will start from 2017 and will be completed in 2023, the Nikkei reported.
A report in The Economic Times on Monday said citing senior government sources that special adviser of the Japanese PM will hold talks with PMO and railway ministry officials in Delhi this week and the terms for bullet train pact will be finalised.
The report also that Japanese loan for the project is likely to be charged just 0.5 percent interest and the tenure is likely to be a lengthy 50 years. This is a big helping hand for India, considering Japan usually gives such loans at 1.5 percent interest rate for 30 years.
Japan’s decision to give virtually free finance for PM Modi’s pet programme is part of its broader push back against China’s involvement in infrastructure development in South Asia over the past several years.
In September, 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.
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.
An earlier Reuters report citing officials said Japan has offered to meet 80 percent of the Mumbai-Ahmedabad project cost, on condition that India buys 30 percent of equipment including the coaches and locomotives from Japanese firms.