Telangana looks to GIFT City to fund Hyderabad Metro buyout after IRFC setback - The HinduUpdated - August 21, 2026 11:45 pm IST - HYDERABADA Hyderabad Metro train passes over Parade Ground metro station against a twilight sky in Secunderabad. | Photo Credit: RAMAKRISHNA G.The Telangana government, which has engaged SBI Capital Markets (SBI Caps) to secure a soft loan of around ₹13,500 crore for acquiring the 69.2-km Phase I of Hyderabad Metro Rail (HMR) from L&T, is reportedly exploring funding options through Gujarat’s GIFT City.Senior officials, speaking on condition of anonymity, said SBI Caps has been asked to quickly identify an alternative funding partner after the proposed loan of ₹13,527 crore from the Indian Railway Finance Corporation (IRFC) was halted at the last minute in May. The move reportedly followed intervention from the Ministry of Railways, which maintained that IRFC’s mandate is limited to financing new projects and not the refinancing of existing assets.Officials said GIFT City could offer a possible solution, as it allows refinancing of existing projects through foreign currency loans. This could provide much-needed relief to the State government, which is attempting to break the deadlock over the proposed expansion of Hyderabad Metro through a 50:50 joint venture with the Centre.However, it remains unclear whether funding through GIFT City would also require prior approval from the Centre before disbursement. State officials, nevertheless, are optimistic, pointing out that the government has already obtained clearances from the Reserve Bank of India and provided statutory guarantees to support the proposed borrowing.There is also uncertainty over whether SBI Caps is revisiting the financial and technical valuation of HMR Phase I earlier undertaken by consultants such as IDBI Capital and DMRC International. Their assessment formed the basis for fixing the state’s equity payment to L&T at ₹1,462 crore and the proposed ₹13,527-crore borrowing from IRFC which fell through.During a meeting in June attended by Chief Minister A. Revanth Reddy and Union Ministers Manohar Lal Khattar, Ashwini Vaishnaw and G. Kishan Reddy, it was decided that SBI Caps would undertake a fresh valuation of HMR Phase I. The objective is to create a unified metro entity comprising both the existing network and the proposed 122.9-km Phase II project, estimated to cost ₹38,595 crore, thereby facilitating a 50% equity participation by the Centre.While the Centre and the State were expected to nominate officials to coordinate the process, little progress has been made public. Meanwhile, the State government appears to be moving ahead rapidly with preparations for HMR Phase II, including seeking departmental clearances, calling tenders to appoint a General Consultant for five of the seven proposed corridors covering 63 km and approaching DMRC for procurement of 60 metro coaches to augment HMR Phase I.But, there could be roadblocks. “Without formation of the JV and the required approvals from the Centre, the statutory agencies concerned will not grant clearances for new train sets operations or commissioning new routes as per the Metro Act,” said an official, unwilling to be identified.Published - August 21, 2026 07:41 pm ISTSign in to unlock member-only benefits!Access 10 free stories every monthSave stories to read laterAccess to comment on every storySign-up/manage your newsletter subscriptions with a single clickGet notified by email for early access to discounts & offers on our products${ ind + 1 } ${ device }Last active - ${ la }