The Government of India's Union Council of Ministers has approved a new policy regarding the expansion and regulation of metro rail services.

The policy makes private public partnerships (PPP) mandatory to procure central funding for new projects in order to allow private investments in metro developments.

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The policy states: “Private participation either for complete provision of metro rail or for some unbundled components (like Automatic Fare Collection, Operation & Maintenance of services etc) will form an essential requirement for all metro rail projects seeking central financial assistance.”

It also emphasises the need to focus on a catchment area of five kilometres, and ensures last mile connectivity via feeder services and non-motorised transport infrastructure.

Additionally, the policy requires state governments to set up an Urban Metropolitan Transport Authority (UMTA), which will be responsible for developing comprehensive mobility plans for cities to enable complete multi-modal integration and optimal utilisation of capacities.

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"All new proposals for metro projects are required to be evaluated and assessed by an independent third-party agency, which will be identified by the government."

The new policy also calls for an ‘Alternative Analysis’ to ensure the implementation of the most cost-effective modes of mass transit, taking into account demand, capacity and feasibility.

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All new proposals for metro projects are required to be evaluated and assessed by an independent third-party agency, which will be identified by the government. 

The new policy mandates a shift from the present ‘Financial Internal Rate of Return of 8%’ to ‘Economic Internal Rate of Return of 14%’ for the approval of metro projects, considering the social, economic and environmental gains associated with such initiatives. 

The policy enables the state to devise rules and regulations, and form a permanent Fare Fixation Authority to set up fare structures.

States will be able to implement metro projects under any of the three options for availing central assistance, which all include a mandatory private participation.

Metro projects with a total length of 370km are currently operational in eight Indian cities, with several others now under development.