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Japan Pulls Ahead of China in Bid for Indian Rail Deal

India is looking to build its first high-speed rail line, inviting competition from Japan and China. Reuters has the story:

Japan has offered to finance India’s first bullet train, estimated to cost $15 billion, at an interest rate of less than 1 percent, 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-kilometre corridor linking Mumbai with Ahmedabad, the commercial capital of Prime Minister Narendra Modi’s home state, and concluded it would be technically and financially viable.

The project to build and supply the route will be put out to tender, but offering finance makes Japan the clear frontrunner.

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.

Japan has been looking for opportunities to challenge China’s position as a leading international developer, and the country suffered a recent loss in that competition: Just earlier this month, China beat out Japan on a rail contract in Indonesia, as it looked like China was simply more willing to take on risk than Japan. So the India contract would be a big economic and political victory for Japan.

Although we don’t expect Japan and China to offer deals unless they expect to profit from them, the geopolitical competition between the two is definitely good for countries seeking infrastructure development. Access to cheap Japanese and Chinese credit will be a big help for emerging markets, including smaller economies that are struggling far more than India.

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