Japan's bullet train gives 164-year-old Indian railway a jolt

[NEW DELHI] Japan's government and its rail companies lobbied the US for years to sell its bullet-train technology and found little success. Finally, there's an international buyer: India.

The South Asian country is poised to become the first nation to import the iconic 'Shinkansen' bullet trains, which will be a highlight of India's infrastructure upgrade program. The Japanese government has also agreed to fund most of the US$17 billion needed for the project that will become part of Asia's oldest railway network. Japan had previously given its super-fast train technology only to Taiwan.

On Thursday, Prime Minister Narendra Modi and Japan's Shinzo Abe will formally kick off a plan to build the 316-mile bullet train line - roughly the distance between 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 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 Inc, 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 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 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 isn't the only country in Asia that is offering potential in high-speed 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.

BLOOMBERG