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Published: 22 August 2010      

JICA loan for India’s rail freight network

The Japan International Cooperation Agency (JICA) has signed a loan agreement with the government of India to help develop the country’s freight rail network, adding to what will be the largest Official Development Assistance (ODA) loan ever allocated by Japan to a single project.

Worth US$18.5M, the loan will help build 552 km of rail track for freight traffic in the country’s western corridor between Delhi and Mumbai. It is the second phase of the Japanese-Indian collaborative Dedicated Freight Corridor (DFC) project. The total amount of ODA loan allocated to the DFC Project is also expected to be among the largest in the world.

As part of this initiative, a dedicated freight rail line will be constructed, complete with fully automated signals and communication systems. The loan will also fund high-speed trains designed for freight transportation, as well as an initial review of the basic infrastructure design and tender preparation process.

The volume of rail freight traffic in India has increased at a rate of 15% per year since 1991. Developing and upgrading the railway system is high on the government’s agenda if the infrastructure is to keep pace with further growth.

JICA has played an integral part in supporting the development of India’s transport infrastructure as part of the Indian government’s 10th and 11th five-year plans (2002-2007 and 2007-2012 respectively).The latest plan has set the introduction of high speed freight trains and improved access to port facilities as some of the country’s top development priorities.

In 2005, then-Japanese Prime Minister Junichiro Koizumi made a joint statement during a visit to India in which he announced the Japanese government’s intention to support the development of India’s western freight corridor through a Japanese ODA loan. Sustained support was then provided for the formulation and initial implementation of the project, leading up to a US$1B loan for the construction of the corridor’s first phase in 2009.

The DFC Project is an important part of Delhi-Mumbai Industrial Corridor (DMIC) initiative, which is a flagship Japanese-Indian collaborative project for comprehensive infrastructure development. The DMIC has been conceived to become India’s largest industrial belt by linking the industrial parks and ports of the six states between Delhi and Mumbai in order to promote foreign export and direct investment, particularly from Japan.

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