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Japan has reportedly offered to finance India’s first bullet train project between the western cities of Ahmedabad and Mumbai, a distance of 505km.

The loan, which is likely to cover 80% of the $15bn project, will be granted at an interest rate of as low as 1%, provided India agrees to buy 30% of required equipment from Japan.

The equipment would include coaches and locomotives, unidentified officials were quoted by media reports as saying.

Japan’s International Cooperation Agency undertook the feasibility study of the project that would reduce travel times between the two cities from 7h to 2h.

"What complicates the process is Japanese linking funding to use of their technology. There must be tech transfer."

The bullet train is expected to have speeds between 300km/h and 350km/h.

Though India will float tenders for construction and supply contracts of the bullet train project, Japan would have an edge over other competitors, including China, if the loan proposal is accepted by the government, Reuters reported.

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By GlobalData

Indian Railway Board chairman AK Mital said: "There are several (players) offering the high-speed technology. But technology and funding together, we only have one offer. That is the Japanese."

"What complicates the process is Japanese linking funding to use of their technology. There must be tech transfer."

The offer is being seen as an effort by Japan to vie with China, which recently won a major high-speed rail contract in Indonesia, beating its Asian rival.

China is also involved in the feasibility study of a 1,200km high-speed train between Delhi and Mumbai, under a contract awarded last month.

This week, Japan Railways Group (JR Group) partnered with Taiwan High Speed Rail to work together in overseas high-speed rail markets, amid protests from China.

Image: The Taiwanese High Speed Rail 700T, derived from Japan’s Shinkansen. Photo: courtesy of Alec @ Taiwan via Wikipedia.