State-owned Indian Railway Finance Corporation Ltd (IRFC), the financing arm of Indian Railways, is set to sign a memorandum of understanding (MoU) with Vadhvan Port Project Ltd to provide funding of up to ₹20,000 crore for the construction of the upcoming Vadhvan Port in Maharashtra.
According to sources, IRFC has expressed its willingness to extend financial support for the mega port project, which is estimated to cost ₹76,220 crore and will have a capacity to handle 298 million tonnes (mt) of cargo annually, including 24.5 million TEUs of container traffic.
“If they are ready to give money at 7–7.2 per cent, that’s the best option, because even if we go outside, it will cost us around that much. So, instead of borrowing from elsewhere, we can use a PSU to fund the project,” said a person familiar with the development.
The MoU is expected to be signed during the India Maritime Week, which begins on October 27 in Mumbai. The project will start drawing funds from 2027, after the equity portion is fully utilised.
IRFC, a Navratna public sector enterprise, has been diversifying into broader infrastructure financing after the Indian Railways began receiving the bulk of its rolling stock funding through Gross Budgetary Support (GBS) in recent years. The corporation is now focusing on financing forward and backward linkages to the rail network, including ports, power plants, coal mines, and rail lines connecting ports to the Dedicated Freight Corridor (DFC).
Sources said IRFC aims to offer funding at rates lower than those extended by Power Finance Corporation (PFC) and REC Ltd, as part of its strategy to make infrastructure investments more affordable. “IRFC is trying to mobilise funds as cheaply as possible and channel them into infrastructure projects with minimal margins because, ultimately, reducing financing costs is crucial to making infrastructure investment viable,” a source added.
In May 2025, IRFC raised ₹3,000 crore from the domestic debt market through five-year bonds at a record low coupon rate of 6.65 per cent.
Other potential lenders to the Vadhvan Port Project include Japan International Cooperation Agency (JICA), PFC, and REC, all of whom have earlier signed MoUs with Vadhvan Port Project Ltd, the special purpose vehicle (SPV) implementing the project.
Once completed, Vadhvan Port is expected to become one of India’s largest and most modern deep-draft ports, boosting the country’s maritime trade capacity and strengthening connectivity with global shipping networks.
