In order to kick start long pending infrastructure projects in the rail sector, railway ministry is keen to ink joint venture with state governments to clear the main hurdle of land acquisition blocking these projects involving an investment worth Rs. 2 lakh-cr. The innovative idea is also in keeping with the ministry's strategy of decentralizing decision-making in the railways by empowering the general managers of various zones to take spot decisions. In this connection, to institutionalize cooperation with states, railway minister has already written to all chief ministers proposing partnerships to develop and strengthen railway infrastructure, including railway stations, adding tracks and building road, rail over and under bridges. Once a project is identified, the railways can form a joint venture with the state to implement it and it could also be done through a special purpose vehicle (SPV).

An industry insider claimed that such a move will be beneficial to all the stakeholders as finances will be shared by both state and central government and the state will have a sense of ownership and pride in the project. There can also be a 3-way JV as the state can rope in private player. The railways had earlier offered Chandigarh, Bijwasan, Anand Nagar (Pune), Habibganj, Gandhinagar, Surat and Mangalore stations to be developed as model and that the cost of upgrading each station was pegged at more than Rs. 500cr. In fact, the railways hopes to use the same model for the development and modernization of railway stations as there are 7,000 stations that have been identified for modernization and the railway has sought the cooperation of state governments to develop and modernize these stations. As a matter of fact, apart from easing overseas investment limits for the rail sector, the government has also sought to make the investment rules less stringent as now the railways does not choose which projects are open to private investment and instead investors are now free to pick the projects they are keen to finance.