Ja­pan’s bul­let train gives 164-year-old In­dia rail­way a jolt

Today - - WORLD -

NEW DELHI/TOKYO — Ja­pan’s gov­ern­ment and its rail com­pa­nies lob­bied the United States for years to sell its bul­let-train tech­nol­ogy and found lit­tle suc­cess. Fi­nally, there is an in­ter­na­tional buyer: In­dia.

The South Asian coun­try will be­come the first to im­port the iconic ‘Shinkansen’ bul­let-train tech­nol­ogy af­ter Ja­pan’s near-neigh­bour Tai­wan, and that will be a high­light of In­dia’s in­fra­struc­ture up­grade pro­gram. The Ja­panese gov­ern­ment has also agreed to fund most of the US$17 bil­lion (S$21 bil­lion) needed for the pro­ject that will be­come part of Asia’s old­est rail­way net­work.

Yes­ter­day, Prime Min­is­ter Naren­dra Modi and Ja­pan’s Shinzo Abe for­mally kicked off a plan to build the 500km line — roughly the dis­tance be­tween Los An­ge­les and San Fran­cisco. Fi­nanc­ing by Ja­pan also means busi­ness farmed out to com­pa­nies such as Hi­tachi Lim­ited and East Ja­pan Rail­way Com­pany. It is also an op­por­tu­nity lost for China’s CRRC Cor­po­ra­tion Lim­ited and Euro­pean man­u­fac­tur­ers in­clud­ing Al­stom SA.

For Ja­pan, which is locked in a strate­gic ri­valry with China for com­mer­cial con­tracts abroad, the In­dian pro­ject marks a hard-fought vic­tory as they com­pete against Siemens AG, Bom­bardier In­cor­po­rated, Al­stom and, lately, CRRC in a global mar­ket pro­jected by BCC Re­search to be worth about US$133 bil­lion by 2019.

Af­ter build­ing the world’s largest high-speed net­work since the start of the cen­tury, cov­er­ing 80 per cent of its ma­jor cities, China has been rais­ing its pro­file.

“The com­pe­ti­tion be­tween China and Ja­pan, es­pe­cially in the Asean (As­so­ci­a­tion of South-east Asian Na­tions) re­gion, has been fairly in­tense, and in In­dia, there will be more com­pe­ti­tion for other phases of the bul­let train pro­ject,” said Mr Jaideep Ghosh, part­ner and head of trans­port at con­sul­tancy KPMG. “Ja­pan has a longer his­tory of op­er­at­ing the sys­tem with­out any fa­tal­i­ties. Pol­i­tics and strate­gic con­sid­er­a­tions do play a part, but fi­nally it is a com­mer­cial de­ci­sion.”

In­dia is not the only coun­try in Asia that is of­fer­ing po­ten­tial in high­speed rail. China out­bid Ja­pan to win a US$5.5 bil­lion pro­ject in In­done­sia in 2015, while the two coun­tries are poised for a face-off again over a pro­posed Sin­ga­pore-Kuala Lumpur link sched­uled for com­ple­tion by 2026.

United States President Don­ald Trump cam­paigned for im­prov­ing in­fra­struc­ture dur­ing elec­tions. In Fe­bru­ary, ahead of a meet­ing with Mr Abe, Mr Trump even talked about high-speed rail­way lines. Mr Trump told air­line bosses that Ja­pan and China “have fast trains all over the place. We don’t have one,” ac­cord­ing to a tran­script of a meet­ing he had with air­line chiefs.

In 2010, Ja­pan of­fered to build high-speed rail in Cal­i­for­nia as part of a US$40 bil­lion pro­ject af­ter dis­cus­sions with then-Gover­nor Arnold Sch­warzeneg­ger.

In 2014, Mr Abe said his gov­ern­ment may pro­vide fi­nanc­ing to sup­port Cen­tral Ja­pan Rail­way Com­pany’s bid to pro­vide ma­glev trains for a Wash­ing­ton-Bal­ti­more line.

A bul­let train on In­dian soil is part of Mr Modi’s am­bi­tious plan to mod­ernise rail in­fra­struc­ture af­ter decades of un­der­in­vest­ment. He is pour­ing as much as 8.6 tril­lion ru­pees (S$181 bil­lion) to up­grade the con­gested and age­ing lines that daily carry the equiv­a­lent of Aus­tralia’s pop­u­la­tion. The net­work was started un­der Bri­tish colo­nial rule 164 years ago.

He is also count­ing on the pro­ject to spur a man­u­fac­tur­ing and em­ploy­ment boom. His gov­ern­ment says it will cre­ate 20,000 con­struc­tion jobs, apart from 4,000 di­rect and 20,000 in­di­rect jobs for op­er­a­tions. Lo­cal com­pa­nies such as Larsen & Toubro Lim­ited, Gam­mon In­dia Lim­ited and GMR In­fra­struc­ture Lim­ited are also look­ing to win some of the con­tracts.

Ja­pan has pitched qual­ity as the pri­mary sell­ing point to In­dia — a net­work that boasts zero fa­tal ac­ci­dents in its more than half-cen­tury of his­tory. Ja­pan’s rel­a­tively high ini­tial costs can be off­set by lower re­pair ex­penses over a life­span of decades, Ja­panese of­fi­cials have said.

“We will work closely with the Ja­panese gov­ern­ment and JR East to ac­tively re­spond to the in­tro­duc­tion of the Shinkansen sys­tem to In­dia,” Hi­tachi spokesman Tat­suya Moriki said, adding that chair­man Hiroaki Nakan­ishi will at­tend the func­tion in In­dia.

In­dia is re­view­ing prospects for at least six more po­ten­tial bul­let-train cor­ri­dors, in­clud­ing one that would con­nect Mum­bai to New Delhi, although no de­ci­sion has been taken. In­dia has said it is in talks with Ja­pan and other coun­tries for those projects. BLOOMBERG

A bul­let train on In­dian soil is part of Mr Modi’s am­bi­tious plan to mod­ernise rail in­fra­struc­ture af­ter decades of un­der­in­vest­ment.

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