Germany provides significant fiscal aid to India’s burgeoning mass rapid transit system

Under the aegis of the bilateral cooperation pact signed between Germany and India last year, the German development bank KfW has provided a loan of US$ 660.7 million to fund Mumbai’s Metro Rail.

November 6, 2020

German development bank KfW approved a loan of US$ 660.7 million to the Union finance ministry to fund Mumbai’s Metro Line 4 and Line 4A.

This package consists of a development loan of US$ 418.3 million and a promotional loan of US$ 242.5million, with an interest rate varying from 0.07% to 0.82%.

Metro Line 4 from Wadala to Kasarvadavai and Line 4A from Kasarvadavali to Gaimukh will connect the island city to the northern suburb of Thane.

In 2019, Germany had pledged an amount of US$ 2 billion for projects in energy and energy efficiency and urban development & re-motorisation.

Bolstering Mumbai Metro’s infrastructure and expanding the mass rapid transit system, of the largest metro railway network worldwide, German development bank KfW has approved a loan of US$ 660.7 million to the Union finance ministry to fund Mumbai’s Metro Line 4 and Line 4A. The German Federal Ministry for Economic Cooperation and Development (BMZ) and KfW have provided a credit package consisting of a development loan of US$ 418.3 million and a promotional loan of US$ 242.5 million, with an interest rate varying from 0.07% to 0.82% across different tranches. Metro Line 4 from Wadala to Kasarvadavai and Line 4A from Kasarvadavali to Gaimukh will connect the island city to the northern suburb of Thane. This is part of the Mumbai Metropolitan Region Development Authority’s plan to build a 337-km metro rail network, wherein currently 118 km of metro lines are in various stages of construction while 11 km is operational.

Metro Rail has been prioritised by both central and state governments, as the mass rapid transit system for urban transportation. Manufacturing and services in the metro rail segment provides a plethora of opportunities, thereby attracting many a global firm to the Indian market. These foreign investments have created jobs, skilled our labour force increased production, used their facilities for exports as well as to service their global orders, which in turn has helped India to be part of their global value chains in a couple of systems in the metro rail segment. 

As part of the bilateral cooperation in energy and urban development sectors between India and Germany, the two nations agreed to collaborate on the Mumbai Metro and solar energy projects. Last year, German Chancellor, Angela Merkel, visited India during the 5th Indo-German Inter-Governmental Consultations to strengthen bilateral ties between the two nations. 17 agreements were signed between India and Germany in the fields of agriculture, maritime technology, Ayurveda, and yoga, among others. Germany had pledged an amount of US$ 2 billion for projects in energy and energy efficiency and in natural resource management as well as urban development and urban re-motorisation.