While the dedicated freight corridor project is not showing any signs of taking off, the railway ministry officials say talks with Japan for a Rs 20,000-crore (Rs 200-billion) loan for the project are on.

According to senior ministry officials, the loan is expected to be approved within six months. The plan is to construct two rail corridors between Delhi-Mumbai (western corridor) and Delhi-Kolkata (eastern corridor). These would be exclusively for freight trains and run parallel to the national highways connecting the four metros.

Talks between the finance ministers of both the countries today seem to have strengthened the chances of the loan materialising. Finance Minister P Chidambaram today met his Japanese counterpart Fukushiro Nukaga and both sides called for increasing collaboration in the infrastructure sector, including in the Dedicated Freight Corridor Project and the Delhi-Mumbai Industrial Corridor Project.

Though the ministry has been talking to the Japanense government for the loan since 2005, it has not started construction. Therefore, the possibility of the loan being approved looked remote in recent times. In fact, the work on the project was supposed to start by October 2007. The ministry is now planning a relook at the alignments for the two corridors, which could further delay the project.

Under such a scenario, the talks of loan materialising seem interesting. Of the Rs 28,000 crore (Rs 280 billion) needed for the project, Rs 8,000 crore (Rs 80 billion) is to be raised by the railways ministry as equity, while the remaining will be raised through debt, to be borne by the Japanese loan, sources say.

The railway ministry has already set up a special purpose vehicle called Dedicated Freight Corridor India Ltd to execute the project. The two corridors would cover a distance of around 5,600 km.