NEW DELHI • India's Cabinet has cleared a US$14.7 billion (S$20.6 billion) Japanese proposal to build its first bullet train line, one of India's biggest foreign investments in its infrastructure sector.
The decision, ahead of Japanese Prime Minister Shinzo Abe's visit today, gives Japan an early lead over China, which is also bidding to build high-speed rail lines across large parts of India's congested and largely British-era system.
Japan offered to finance 80 per cent of the cost of the train, which links financial capital Mumbai with Ahmedabad, the commercial centre of Indian Prime Minister Narendra Modi's home state of Gujarat, at an interest rate of less than 1 per cent.
An official in Mr Modi's office confirmed the decision, saying there were some issues relating to the bullet train, but they were sorted out in time for Mr Abe's visit.
"We expect to make an announcement during the visit," the official, who declined to be named, said.
Mr Modi and Mr Abe have forged a strong relationship, seeking to expand commercial and defence ties and push back against the rising influence of China across Asia.
Japan's International Cooperation Agency completed a feasibility study in July on the 505km Mumbai-Ahmedabad corridor, offering to cut travel time to two hours from the current seven to eight hours.
China was, in September, given the right to assess the feasibility of a high-speed train link between Delhi and Chennai, in the south, after getting clearances from India's security agencies, which are wary of Chinese involvement in infrastructure areas such as telecoms and railways.
A railway official said a panel led by Mr Modi's adviser, Mr Arvind Panagariya, had cited the accident-free record of Japan's high-speed trains in its recommendation.
Lured by the scale of India's vast rail network, foreign rail companies are aggressively campaigning to sell their technology and steal a march on rivals.