Germany’s Deutsche Bahn Engineering & Consulting is in talks with Indian Port Rail Corp. Ltd (IPRCL) to form a joint venture (JV) to develop rail connectivity for Indian ports.

Minister for road transport and highways and shipping Nitin Gadkari said in October that India and Germany were working together on projects worth Rs1 trillion being implemented by IPRCL.

India has envisaged Rs8 trillion of investment until 2035 under the Sagarmala program, which involves the construction of new ports to harness the country’s 7,517km coastline and setting up of as many as 142 cargo terminals at major ports.

“Indian ports have enough funds. The idea is to set up a JV with Deutsche Bahn Engineering & Consulting for setting up railway port connectivity projects. This will be a PSU (public sector unit) to PSU arrangement. Deutsche Bahn will bring in the latest technology,” said a person aware of the JV plans, requesting anonymity.

IPRCL and Deutsche Bahn signed a memorandum of understanding (MoU) on modernization of rail port connectivity and port rail facilities of Indian ports during the Maritime India Summit last year.

“Basically in railways, there is always a lot of scope. So this particular German government company and they have signed a MoU for mutual cooperation...Now, as far as I believe, they have had a few rounds of discussions regarding where there could be synergies between the two,” shipping secretary Rajiv Kumar said.

“This will improve the port hinterland connections to the railway network of Indian Railways. The MoU foresees comprehensive cooperation for designing the connection projects, drawing up the operations plan, and carrying out the engineering design and project management through to delivery to the port authority,” a spokesperson for Deutsche Bahn said, adding that negotiations are still in progress with IPRCL.

Queries emailed to IPRCL remained unanswered.

India will invest as much as Rs3.9 trillion for creating and upgrading infrastructure in the next fiscal year. Of this, the government has made an allocation of Rs2.4 trillion for roads, railways, and ports in 2017-18. Projects worth Rs1 trillion are in various stages of implementation under the Sagarmala program.

“The Budget has also made a proposal to enhance coastal connectivity through construction of 2,000 km of roads. Such projects over the medium term would provide construction opportunities of over Rs20,000 crore,” rating company ICRA Ltd wrote in a 3 March report. IPRCL was set up by the ministry of shipping for better cargo handling and to reduce the cost of logistics. Deutsche Bahn has been active in India, providing consultancy services to Dedicated Freight Corridor Corp. of India Ltd for the new freight transport line between Sahnewal and Pikhani that is part of the Eastern Corridor.

India has firmed up the contours of its ambitious multi-modal program to reduce logistics costs and make the economy competitive. The strategy involves a reset of India’s logistics sector from a “point-to-point” model to a “hub-and-spoke” model and involves railways, highways, inland waterways, and airports to put in place an effective transportation grid. India loses $6.6 billion every year in transportation delays for freight, says a comparison study of the survey data for the calendar years 2008-09, 2011-12 and 2014-15 by the Indian Institute of Management (IIM), Calcutta. These delays cost $14 billion per year on account of fuel consumption.