India clears Japan's $14.7 bn bid for first bullet train ahead of Abe trip

New Delhi: India`s cabinet has cleared a $14.7 billion Japanese proposal to build its first bullet train line, an Indian government minister and official said on Thursday, one of India`s biggest foreign investments in its infrastructure sector.

The decision ahead of Japanese Prime Minister Shinzo Abe`s visit beginning on Friday 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 had offered to finance 80 percent of the cost of the train linking 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 percent. 

"It`s been done," a government minister who attended the cabinet meeting headed by Modi late on Wednesday told Reuters.

An official in Modi`s office confirmed the decision, saying there were some issues relating to the bullet train but that had since been sorted out in time for Abe`s visit. 

"We expect to make an announcement during the visit," the official said. Both the minister and the official declined to be identified.

Modi and 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 505-km (315-mile) 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 wary of Chinese involvement in infrastructure areas such as telecoms and railways.

French and Spanish firms are also conducting studies into building two of the routes in a quadrilateral of high-speed train lines criss-crossing the country that would drastically reduce travel times.

A railway official said a panel led by Modi`s adviser, Arvind Panagariya, had cited the accident-free record of the Japan`s high-speed trains in its recommendation.

Lured by the scale of India`s transport needs, foreign rail companies are aggressively campaigning to sell their technology and steal a march on rivals. 

However, the government has not said how it would pay for the new lines if they eventually get the green light.