India’s strategic rail projects with Japan, Iran in trouble

Bullet train projects facing cost overrun while there is reportedly Indian apathy over funding a rail line in Iran

India’s strategic rail projects with Japan, Iran in trouble

Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe during the foundation stone laying ceremony for bullet train. File photo

Sandeep Dikshit

Tribune News Service

New Delhi, July 14

Two rail projects that are statements of diplomatic significance are in trouble and would need intervention by Prime Minister Narendra Modi, sources said.

The project in partnership with Japan to run the subcontinent’s first Bullet Train is facing a cost overrun while there is reportedly Indian apathy over funding a rail line in Iran. The latter’s significance is that it will be Afghanistan’s first route to the Indian Ocean independent of Pakistan.

The Bullet Train project has been impacted by cost overruns, especially during the first two lockdowns when Japan kept asking for relaxation in movement of its engineers and material. The cost overrun is understood to be over $ 2 billion (Rs 15,000 crore) that is beyond the realm of executives from both sides to resolve.

The project faces the danger of sliding into a time overrun if the issue is not considered on a priority basis, said sources. There is also the issue of delays in issuing tenders worth Rs 50,000 crore for the project after India announced the “Atmanirbhar Bharat” initiative to source more form local companies. That has necessitated reworking of calculations. 

The other rail project, on Iranian soil, has seen Tehran fretting that New Delhi is yet to play a bigger role in funding and constructing a strategic transit route from Chabahar to Zahedan in Afghanistan, and from there to Sarakhs at the border with Turkmenistan.

Sources said as far as Chabahar Port is concerned, Iran will always partner with India. In fact, even during the Corona pandemic, humanitarian assistance from India to Afghanistan transited via Chabahar Port which is operated by an Indian public sector company.

Interestingly, the development of Chabahar port by India has been exempted by the US from its sanctions regime. As is the case with Frazad-B gas field which has been offered by Iran to India, Tehran has started expressing its impatience with Indian procrastination in investing in the railway line, a vital link in the International North – South Transit Corridor which significantly shortens the trade routes between India and European and CIS markets.

Diplomatic sources said Tehran has indicated to India that it does not want to depend solely on Beijing for co-development of transportation routes. “Iran is determined to expand its relations with all Asian partners in particular China and India as two friendly countries. Such agreement is fully in the line with Iran’s publicly declared “Look East Policy”,’’ said a diplomatic source.

In the case of Farzad-B oil field, Iran has often threatened to take back ownership from Indian companies if there is no investment for fear of US sanctions. Iran seems to be similarly nudging India to get interested in the rail project by declaring that it has started work but left a window open for Indian rail PSUs to re-enter. An intervention at the highest levels and ample funds have now become roadblocks in two projects of strategic intent.

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