Japan to win contract for India’s first high-speed railway

Japan to win contract for India’s first high-speed railway :India is set to adopt Japanese bullet train technology for its first high-speed railway, with the two nations’ leaders expected to announce the agreement in a joint statement this week, a Japanese government source said Tuesday.

Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi will hold talks in India on Saturday and issue a statement afterwards, the source said. Abe will pay a three-day visit to India from Friday.

The proposed 500-kilometer railway will link Mumbai in western India and Ahmadabad to the north, the source said. The journey would take about two hours.

Construction, which is estimated to cost 980 billion rupees ($14.68 billion), will begin in 2017, with the aim of starting railway operations in 2023.

Tokyo has sounded out New Delhi about providing yen loans on the premise that the railway contract will be given to a consortium of Japanese firms, the source said.

The Japanese side has also been considering offering a package that includes rail cars and railway operation systems, as the cash-strapped Indian government has been cautious. Some have called for a competitive international tender.

Should India agree to adopt shinkansen train technology, Japan would offer softer loan conditions, the source said.

Such conditions are possible under a policy announced by Abe during an international conference in Kuala Lumpur last month. Abe said Japan will ease conditions on yen loans for emerging economies in Asia. Infrastructure exports to the fast-growing region are one way Japan can boost its own economy.

Moreover, adapting its yen loan scheme to meet the requirements of potential partner countries is in reaction to Beijing’s already strong role in meeting Asia’s huge infrastructure needs.

Japan suffered a body blow when it lost out to China this year in bidding to build a high-speed railway in Indonesia.

China won a deal to connect Jakarta with the West Java provincial capital of Bandung in October. The project is estimated to cost 78 trillion rupiah ($5.5 billion).

The Japanese government was dismayed, calling Indonesia’s choice of China “difficult to understand.”

The Indonesian president’s chief of staff said Japan lost because its proposal was more about government-to-government cooperation, while Jakarta preferred business-to-business cooperation. He urged Japan to try for other contracts instead.

“There are a lot of infrastructure projects that we have been offering, not only the Jakarta-Bandung high-speed railway project, but also the one connecting Jakarta and Surabaya,” Presidential Chief of Staff Teten Masduki was quoted saying, referring to the capital of East Java.

Japan seemed destined to win the contract until Jakarta announced in April that China had entered the race with a counter-offer.

China typically points out that it has built thousands of kilometers of high-speed railway in the 12 years since it began constructing bullet trains. However, a 2011 crash killed at least 40 people and injured about 200.

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