New Delhi, Oct. 22: Japan has offered to finance India's first bullet train, estimated to cost $15 billion, at an interest rate of less than 1 per cent, officials said, stealing a march on China, which is bidding for other projects on the world's fourth-largest network.
Tokyo was picked to assess the feasibility of building the 505-km corridor linking Mumbai with Ahmedabad, and concluded it would be technically and financially viable and has offered a soft loan of nearly Rs 80,000 crore.
The route linking Mumbai with Ahmedabad is expected to cost about Rs 98,805 crore.
The project to build and supply the route will be put out to tender, but offering finance makes Japan the clear frontrunner.
Tokyo's push in India comes just weeks after it lost out to China on the contract to build Indonesia's first fast-train link.
Last month, 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. No loan has yet been offered. The Chinese are also known to be studying the feasibility of building a similar train on the Chennai-New Delhi corridor
Japan's decision to give virtually free finance is part of its broader push back against China's involvement in infrastructure development in South Asia over the past several years.
"There are several (players) offering the high-speed technology. But technology and funding together, we only have one offer. That is the Japanese," A.K. Mital, the chairman of the Indian Railway Board, which manages the network told a news agency.
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 Calcutta.
Japan has offered to meet 80 per cent of the Mumbai-Ahmedabad project cost, on condition that India buys 30 per cent of equipment, including the coaches and locomotives, from Japanese firms, officials said.
Japan's International Cooperation Agency (JICA), which led the feasibility survey, said the journey time between Mumbai and Ahmedabad would be cut to two hours from seven. The route will require 11 new tunnels, including one undersea near Mumbai.
"What complicates the process is Japanese linking funding to use of their technology. There must be tech transfer," said Mital.
Officials said the proposal was currently being studied by the railway ministry and after which it would be circulated to concerned ministries for comments before being placed before the cabinet.
Junzo Yamamoto, Japan's state transport minister, was in New Delhi about a week back to woo Indians with Japan's offer. Sources said this followed instructions from Japanese Prime Minister Shinzo Abe to step up exports of transport systems to India and Southeast Asia.
Toshihiro Yamakoshi, counsellor in the economic section of the Japanese embassy, said Japanese companies were keen to collaborate with their Indian counterparts on the rail project.
JICA has also shown interest in the Calcutta-Delhi line, which, according to JICA, will cost much higher at Rs 2-3 lakh crore.
The Diamond Quadrilateral project, Prime Minister Narendra Modi's pet scheme, aims to drastically reduce the travel time between the metro cities with the introduction of the high-speed trains, which will run at about 350 kmph.