What Japan & India Both Gain From the New Bullet Train?

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India is poised to become the first to import the iconic 'Shinkansen' The Bullet-Train Technology after Japan's near-neighbor Taiwan.

The Japanese Government and its Rail Companies lobbied the U.S. for years to sell its Bullet-Train Technology and they found little success. Finally, there's an International buyer: India. India is poised to become the first to import the iconic 'Shinkansen' Bullet-Train Technology after Japan's near-neighbor Taiwan, and that will be a highlight of India's infrastructure upgrade program. The Japanese Government has also agreed to fund the most of the $17 Billion needed for the Bullet Train Project that will become part of Asia's oldest Railway Network.

Today, Prime Minister Narendra Modi and Japan's Shinzo Abe holding their 10th summit and formally kick off a plan to build the 316-mile Bullet Train Line -- roughly the distance between the Los Angeles and San Francisco. Financing by Japan also means business farmed out to companies such as Hitachi Ltd. and East Japan Railway Co. and an opportunity lost for China's CRRC Corp. Ltd. and European Manufacturers including the Alstom SA.

"The competition between China and Japan, especially in the ASEAN region, has been fairly intense and in India, there will be more competition for other phases of the bullet train project," said Jaideep Ghosh, partner and head of transport at consultancy KPMG. "Japan has a long history of operating the Bullet Train System without any fatalities. Politics and strategic considerations do play a part, but finally, it is a commercial decision."

A bullet train on Indian soil is part of PM Modi's ambitious plan to modernize rail infrastructure after decades of underinvestment. He is pouring as much as 8.6 trillion rupees ($134 billion) to upgrade the congested and aging lines that daily carry the equivalent of Australia's population. The network was started under British colonial rule 164 years ago.

PM Modi 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 Ltd., Gammon India Ltd., and GMR Infrastructure Ltd. are also looking to win some of the contracts.

Today, PM Modi and the Japanese PM Shinzo Abe will unveil a plaque at Sabarmati in Gujarat to mark the inauguration of the project linking the financial capital of Mumbai with the economic hub of Ahmedabad. The Japanese Government is financing 81% of the cost of the Bullet Train Project, with a $13.8 Billion soft Yen-loan carrying an interest rate of 0.1%.

Highlights of the Bullet-Train Project:

The official target for completion is 2023. India says it will attempt to have it running a year earlier Total estimated cost is 1.08 trillion rupees While the train is designed to run at 350 kmph, it will operate at a maximum speed of 320 kmph, cutting down travel time between the two cities to about two hours from eight hours Most of the corridor will be elevated but will include a 21 kilometer tunnel with seven kilometers under the Arabian Sea.

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