Who Owns the Vande Bharat Train and Why Does the Government Lease It to IRFC?

Vande Bharat trains belong to and are owned by Indian Railways, a government entity under the Ministry of Railways. These trains are proudly manufactured in India, primarily at the Integral Coach Factory, Chennai, under the ‘Make in India’ initiative. Indian Railways invests in the building of these semi-high-speed trains as a means to modernize the national railway system.

The Role of IRFC

Indian Railways faces monstrously huge financial challenges in acquiring new trains and infrastructure. A multi-billion-dollar investment has gone into the process. To overcome this, the Indian Railway Finance Corporation was created as a dedicated government-owned financial company. IRFC raises money from the market through bonds and debentures and uses it to acquire or build railway assets like Vande Bharat trains.

Why Lease via IRFC?

Leasing involves a contrary approach-it sells a property to counterparties and leases it back for one or more years under Indian Railways rather than outright purchase. This allows spreading of money charges of purchase over many years, somewhat on the pattern of an EMI for a loan. This helps in fast acquisition and modernization without a heavy immediate burden on the Indian Railways budget.

Financial Impact

IRFC has collected lease rental of upward of ₹30,000 crore from Indian Railways, covering both principal and interest, for the year 2023-24. This includes leasing contracts for Vande Bharat trains and other rolling stock and infrastructure projects.

Technically, Indian Railways owns the Vande Bharat trains, but the technical financial lease to IRFC helps balance immediate capital requirements and faster infrastructure development, while maintaining financial sustainability.