The Board of Investment (BoI) is offering investment packages for rail operators to support a new supply chain for train and railway components in the future.
The government is expanding railway megaprojects such as mass transit monorail, as well as intercity high-speed and double-track railways.
Bonggot Anuroj, the BoI's deputy secretary-general, said Thailand should be the hub of an Asean railway system, connecting with neighbouring countries and improving transport and logistics systems.
"The development of railways can support further economic expansion in the future," she said. "The investment incentives for the rail industry will create opportunities for local and overseas companies in the machinery and parts sector."
Ms Bonggot said the BoI's investment incentives aim to lay a foundation of upstream, midstream and downstream for the rail industry in Thailand, with scope for train assembly, components production, and maintenance and repair.
Each investor will be eligible for a corporate income tax waiver of 5-8 years, depending on the category in the rail industry.
"The BoI expects new investment flows in the rail industry to develop the country's railway system and create economic value," Ms Bonggot said.
The rail industry is part of the government's 20-year National Strategic Plan (2017-36).
Industry Minister Suriya Jungrungreangkit said the ministry is in talks with the Transport Ministry to promote the rail industry by inviting rail companies to invest and help develop another sector to drive the Thai economy.
A development plan for the rail industry will be outlined for a proposal to the cabinet soon, Mr Suriya said.
He predicts that Thailand will need roughly 15,000 train bogies in the next 20 years to expand local railways.
The country also needs to develop a maintenance and repair system for railways, including a supply chain for train and railway components.
"Thailand has to lay a foundation for the rail industry because the government has many megaprojects in this sector," Mr Suriya said.