India to Choose Japan as Partner in $15B High Speed Rail Deal

The prime ministers of Japan and India are set to agree a $15bn preliminary deal to build India’s first high-speed rail line.

Officials in the two countries said an agreement to build the 505km bullet train link between Mumbai and Ahmedabad will be signed by Shinzo Abe and Narendra Modi in New Delhi this weekend.

Such a large investment would further cement the already close strategic and commercial ties between Asia’s second- and third-largest economies.

The link, to be financed in part with a Japanese loan at an annual interest rate of 0.5 per cent for up to 50 years, would cut the journey time between Mumbai and Ahmedabad in Mr Modi’s home state of Gujarat from almost eight hours to two hours.

“It is likely to happen; it is likely to get signed,” said an Indian official, noting that Japanese negotiators had agreed to Indian demands including the low-cost financing package. Local media on Thursday said India’s cabinet had cleared the deal. The train line could be extended to New Delhi.

India plans to invest $137bn in its huge but ageing rail network over the next five years in an effort to improve freight transport and capacity. But with the system already bursting at the seams, and roads and domestic airlines equally congested, passengers for a bullet train are unlikely to be in short supply among the country’s 1.3bn people.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza