First-Ever Commercial Financing For DFCCIL: Freight Corridor Corporation Secures $100 Million Loan From Japan's MUFG Bank

The MUFG Bank Ltd of Japan has provided a $100 million external commercial borrowing (ECB) loan to the Dedicated Freight Corridor Corporation of India Ltd (DFCCIL), according to a statement released by the bank.

The Multilateral Investment Guarantee Agency (MIGA), a World Bank Group member, has provided a credit enhancement guarantee for the loan.

MIGA, an arm of the World Bank, offers political risk insurance and credit enhancement solutions for various projects.

MUFG Bank's GIFT branch will facilitate this significant transaction, marking DFCCIL's first-ever commercial financing and MIGA's first transaction in India, as stated by MUFG.

The DFCCIL, which is controlled by the Government of India, is committed to building and managing freight railway corridors throughout the country. This will alleviate congestion in existing transportation networks and promote a more efficient, reliable, and sustainable transport infrastructure.

The Deputy CEO of MUFG India, Shashank Joshi, expressed that this financial framework could act as a model for alternate financing solutions, reports Economic Times. These solutions could potentially drive India's fast-paced infrastructure growth.

Hira Ballabh, the Director of Finance at DFCCIL, stated that this loan could potentially pave the way for funding large-scale infrastructure projects and other businesses within the country.

Dedicated freight corridors

Dedicated freight corridors are proposed to adopt world-class and state-of-the-art technology. Significant improvement is proposed to be made in the existing carrying capacity by modifying basic design features.

The permanent way will be constructed with significantly higher design features that will enable it to withstand heavier loads at higher speeds.

Simultaneously, in order to optimise the productive use of the right-of-way, the dimensions of the rolling stock are proposed to be enlarged. Both these improvements will allow longer and heavier trains to ply the DFCs.

In the first phase, the government of India approved the construction of two corridors — the 1,875 km long eastern dedicated freight corridor (EDFC) and the 1,506 km long western dedicated freight corridor (WDFC).

Prime Minister Narendra Modi flagged off the DFC network's inaugural train on 12 December 2020.

DFC is critical to the National Logistics Policy to lower logistics costs from 15 per cent of GDP to 8 per cent by 2030.

DFC's freight infrastructure capacity increase is critical to achieving Indian Railways' goal of 3,000 MT freight loading by 2030.