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Japan will support India’s first bullet train project by providing its high-speed technology and a $12bn loan.

An agreement was signed to this effect by prime ministers of the two countries, Shinzo Abe and Narendra Modi, during the former’s recent visit to India.

According to previous media reports, the loan will cover 80% of the $15bn project, and is being offered at an interest rate of 1%.

Indian Prime Minister Modi said: "We greatly appreciate prime minister Abe’s extraordinary package of approximately $12bn and technical assistance, on very easy terms, for this project.

"This enterprise will launch a revolution in Indian railways and speed up India’s journey into the future."

"This enterprise will launch a revolution in Indian railways and speed up India’s journey into the future. It will become an engine of economic transformation in India."

The first high-speed train is being planned for the 500km stretch between two western cities of Ahmedabad and Mumbai.

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Running at speeds ranging from of 300km/h to 350km/h, the trains will cut down the travel time between the two cities from the current 7h to 2h.

India has selected Japan’s Shinkansen trains known for their ‘speed, reliability and safety’.

Applauding Modi’s policies, Abe said: "PM Narendra Modi’s economic policies are like Shinkansen; high-speed, safe and reliable and carrying many people along."

Japan has won the India deal months after it lost the $5bn Indonesia high-speed rail project to China. India is likely to buy 30% of the required equipment from Japan.

Earlier this year, Japan International Cooperation Agency undertook a feasibility study for the project.

Image: Indian and Japanese prime ministers Narendra Modi and Shinzo Abe signing the agreement in New Delhi. Photo: courtesy of the Indian Government.