Railways Industry

India has the world's third-largest rail network under single management. Indian Railway has 13,452 passenger trains and 9,141 freight trains. As of 2017-18, Indian Railway had a total route network of about 68,442 kms and operated more than 22,300 trains daily. A total of 1,106 RKM (Route kilometre) has been electrified across the entire Indian Railways network. By 2024, Indian railways will be run completely on electricity.

Revenue growth has been strong over the years. Indian Railways’ gross revenue stood at US$ 24.78 billion in FY20.

Freight earnings in FY20 stood at US$ 16.24 billion. Passenger earnings for Indian Railways was estimated at US$ 7.25 billion in FY20. Freight remains the major revenue earning segment for the Railways and accounted for 64 per cent of its total revenue in FY20, followed by the passenger segment.

Passenger traffic was valued at 8.10 billion and freight traffic at 1,208.34 million tonnes in FY20.

The punctuality performance of Indian Railways for mail and express trains increased to 75.67 per cent during April-December 2019 compared to 68.19 per cent during the same period last year.

As per Union Budget 2020-21, the Ministry of Railways has been allocated Rs 72,216 crore (US$ 10.33 billion). FDI Inflow in railway related components stood at US$ 1.17 billion from April 2000 to March 2020.

In Union Budget 2019-20, the Government planned to enhance metro connectivity by encouraging more public-private partnership (PPP) and ensuring completion of sanctioned works, while supporting Transit Oriented Development (TOD) to ensure commercial activity around transit hubs. Purchasing Power Parities projects investment is estimated to be at Rs 50 lakh crore (US$ 715 billion) for railways by 2030. In 2019, Delhi-Lucknow Tejas Express became the first train to be operated by private players.

With increasing participation expected from private players, domestic and foreign, due to favourable policy measures, both passenger and freight traffic is expected to grow rapidly over the medium to long term. The Government of India’s focus on infrastructure is a major factor which will accelerate growth of railways. Railways infrastructure plans to invest Rs 50 lakh crore (US$ 715.41 billion) by 2030.

In FY20, 15 critical projects of around 562 kms track length worth Rs 5,622 crore (US$ 797.56 million) were completed, out of which, 13 were commissioned by railways. Railways completed electrification on a total of 5,782 route kms during the same year.

In June 2020, Railways created a new world benchmark by commissioning first high rise Over Head Equipment (OHE) with a contact wire height of 7.57 metre and successfully running double stack containers in electrified territory on Western Railway.

Market Size

Indian Railways’ revenue increased at a CAGR of 6.20 per cent during FY08-FY19 to US$ 27.13 billion in FY19. Earnings from the passenger business grew at a CAGR of 6.43 per cent during FY07-FY19 to reach US$ 7.55 billion in FY19P. Freight revenue rose at a CAGR of 4.30 per cent during FY08-FY19 to reach US$ 18.20 billion in FY19.

Revenue growth has been strong over the years. Indian Railways’ gross revenue stood at Rs 183,092.74 crore (US$ 26.20 billion) in FY20 (till February 2020). Freight earnings in FY20 (till February 2020) stood at Rs 119,216.11 crore (US$ 17.06 billion). Passenger earnings for Indian Railways was estimated at 51,077.73 crore (US$ 7.31 billion) in FY20 (till February 2020). Freight remains the major revenue earning segment for Railways, accounting for 65.1 per cent of its total revenue in FY20 (till February 2020), followed by the passenger segment.

Passenger traffic was valued at 7.67 billion and freight traffic at 1,105.33 million tonnes in FY20 (till February 2020).

India was among the top 20 exporters of railways globally as of 2017. India’s export of railways has grown at a CAGR of 31.51 per cent during 2010-2018 to US$ 507.90 million. Exports of railways in 2019E stood at US$ 635 million.

Investments/ Developments

Foreign Direct Investment (FDI) inflow in Railways Related Components stood at US$ 1,107.60 million from April 2000 to March 2020.

Following are some of the major investments and developments in India’s railways sector:

• In November 2019, pilot project was launched to study the feasibility of using Railways’ parcel service for e-tail players.
• In November 2019, Indian Railways entered into Procurement cum Maintenance Agreement with Madhepura Electric Locomotive Pvt. Ltd. (MELPL), a joint venture of Indian Railways and France-based Alstom to manufacture 800 electric locomotives for freight service and its associated maintenance.
• In October 2019, Indian Railway launched One Touch ATVM for fast ticketing at 42 Suburban Stations of Central Railway.
• Khurja –Bhadan section of eastern corridor in Uttar Pradesh to be formally opened for traffic on October 2, 2019.
• In July 2019, longest electrified tunnel built between Cherlopalli and Rapuru stations

Pharmaceutical Industry

 Indian pharmaceutical industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK1

 India accounts for 20 per cent of global exports in generics. India’s pharmaceutical export stood at US$ 20.70 billion in FY20.

 Indian pharmaceutical sector is expected to grow at a CAGR of 22.4 per cent in the near future and medical device market expected to grow US$ 25 billion by 2025. India is the second largest contributor of global biotech and pharmaceutical workforce. The pharmaceutical sector was valued at US$ 33 billion in 2017.

 Indian healthcare sector, one of the fastest growing sectors, is expected to cross US$ 372 billion by 2022

 By FY25, India’s biotech industry is estimated to increase to US$ 100 billion

Biosimilar  The Government plans to allocate US$ 70 million for local players to develop Biosimilar.  The domestic market is expected to reach US$ 40 billion by 2030.  As on August 2019, the moving annual turnover (MAT) for biosimilar molecules sold in the domestic market stood at Rs 1,498 crore (US$ 214.31 million)

Contract Research and Manufacturing Services (CRAMS)  Fragmented market with more than 1,000 players  CRAMS industry has posted 48 per cent CAGR between FY15-18 and expected to witness a strong growth over 25 per cent over 2018-21

Formulations  Largest exporter of formulations in terms of volume, with 14 per cent market share and 12th in terms of export value.  Double-digit growth is expected over the next five years

 India’s domestic pharmaceutical market turnover reached Rs 1.4 lakh crore (US$ 20.03 billion) in 2019, growing 9.8 per cent year-on-year (in Rs) from Rs 129,015 crore (US$ 18.12 billion) in 2018.  Medicine spending in India is projected to grow 9-12 per cent over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.  India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.  The Ayurveda sector in India reached US$ 4.4 billion by 2018 end and grow at 16 per cent CAGR till 2025.  In May 2020, the Indian pharmaceutical sales grew 9 per cent y-o-y to Rs 10,342 crore (US$ 1.47 billion)

 1With 70 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector. Over the Counter (OTC) medicines and patented drugs constitute 21 per cent and 9 per cent, respectively  The share of generic drugs is expected to continue increasing; domestic generic drug market is expected to reach US$ 27.9 billion in 2020  Due to their competence in generic drugs, growth in this market offers a great opportunity for Indian firms  Based on moving annual turnover, Anti-Infectives (13.6%), Cardiac (12.4%), Gastro Intestinals (11.5%) had the biggest market share in the Indian pharma market in 2018.  The highest growth in sales in 2018 were seen in hormones (14.2%), anti diabetic (12.9%), and respiratory (12%).  During December 2019, on moving annual total (MAT) basis, industry growth was at 9.8 per cent, with price growth at 5.3 per cent, new product growth at 2.7 per cent while volume growth at two per cent y-o-y.

 India is the world’s largest provider of generic medicines; the country’s generic drugs account for 20 per cent of global generic drug exports (in terms of volumes). Indian drugs are exported to more than 200 countries in the world, with the US as the key market.  Indian pharma companies are capitalising on export opportunities in regulated and semi-regulated markets.  Pharmaceutical export from India, which include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgical, reached US$ 20.70 billion in FY20.  The biggest export destination for Indian pharma product is the US. In FY19, 32.1 per cent of India’s pharma exports were to the North America, followed by 17.96 per cent to Africa and 15.70 per cent to the European Union

 Indian pharma companies spend 8-13 per cent of their total turnover on R&D.  Expenditure on R&D is likely to increase due to the introduction of product patents; companies need to develop new drugs to boost sales.  47 per cent of top pharmaceutical companies in India are now providing tools for clinical decision support and 33 per cent are providing virtual caregiving support

 India’s pharmaceutical export market is thriving due to strong presence in the generics space.  Pharmaceutical exports from India stood at US$ 20.70 billion in FY20 and US$ 1.53 billion in April 2020

 In May 2020, Jubilant Generics Ltd entered into a non-exclusive licencing agreement with US-based Gilead Sciences Inc to manufacture and sell the potential COVID-19 drug Remdesivir in 127 countries, including India.  In June 2020, Syngene International Ltd developed its own ELISA antibody testing kits at its research facility in Bengaluru and tied up with HiMedia Laboratories for manufacturing and distribution of the testing kits.

 Sun Pharma arm enters China market by entering in agreement with China Medical System.  Sun Pharma entered into a global licensing agreement with Hyderabad based CSIR Indian Institute of Chemical Technology