Agriculture in India: Information about Indian Agriculture & Its Importance

Introduction

Agriculture is the primary source of livelihood for about 58 per cent of India’s population. Gross Value Added by
agriculture, forestry and fishing is estimated at Rs 17.67 trillion (US$ 274.23 billion) in FY18.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to
its immense potential for value addition, particularly within the food processing industry. The Indian food and grocery
market is the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry
accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in
terms of production, consumption, export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross
Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six per cent of
total industrial investment.

Market Size

During 2017-18* crop year, food grain production is estimated at record 284.83 million tonnes. In 2018-19,
Government of India is targeting foodgrain production of 285.2 million tonnes. Milk production was estimated at 165.4
million tonnes during FY17, while meat production was 7.4 million tonnes. As of September 2018, total area sown
with kharif crops in India reached 105.78 million hectares.

India is the second largest fruit producer in the world. Production of horticulture crops is estimated at record 306.82
million tonnes (mt) in 2017-18 as per third advance estimates.

Total agricultural exports from India grew at a CAGR of 16.45 per cent over FY10-18 to reach US$ 38.21 billion in FY18.
Between Apr-Oct 2018 agriculture exports were US$ 21.61 billion. India is also the largest producer, consumer and
exporter of spices and spice products. Spice exports from India reached US$ 3.1 billion in 2017-18. Tea exports from
India reached a 36 year high of 240.68 million kgs in CY 2017 while coffee exports reached record 395,000 tonnes in
2017-18.

Food & Grocery retail market in India was worth US$ 380 billion in 2017.
Investments

According to the Department of Industrial Policy and Promotion (DIPP), the Indian food processing industry has
cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 8.57 billion between April 2000 and
June 2018.
Some major investments and developments in agriculture are as follows:
By early 2019, India will start exporting sugar to China.
The first mega food park in Rajasthan was inaugurated in March 2018.
Agrifood start-ups in India received funding of US$ 1,66 billion between 2013-17 in 558 deals.
In 2017, agriculture sector in India witnessed 18 M&A deals worth US$ 251 million.
Government Initiatives

Some of the recent major government initiatives in the sector are as follows:

The Agriculture Export Policy, 2018 was approved by Government of India in December 2018. The new policy aims to
increase India’s agricultural exports to US$ 60 billion by 2022 and US$ 100 billion in the next few years with a stable
trade policy regime.

In September 2018, the Government of India announced Rs 15,053 crore (US$ 2.25 billion) procurement policy named
‘Pradhan Mantri Annadata Aay SanraksHan Abhiyan' (PM-AASHA), under which states can decide the compensation
scheme and can also partner with private agencies to ensure fair prices for farmers in the country.

In September 2018, the Cabinet Committee on Economic Affairs (CCEA) approved a Rs 5,500 crore (US$ 820.41 million)
assistance package for the sugar industry in India.

The Government of India is going to provide Rs 2,000 crore (US$ 306.29 million) for computerisation of Primary
Agricultural Credit Society (PACS) to ensure cooperatives are benefitted through digital technology.

With an aim to boost innovation and entrepreneurship in agriculture, the Government of India is introducing a new
AGRI-UDAAN programme to mentor start-ups and to enable them to connect with potential investors.

The Government of India has launched the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with an investment of Rs
50,000 crore (US$ 7.7 billion) aimed at development of irrigation sources for providing a permanent solution from
drought.

The Government of India plans to triple the capacity of food processing sector in India from the current 10 per cent of
agriculture produce and has also committed Rs 6,000 crore (US$ 936.38 billion) as investments for mega food parks
in the country, as a part of the Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters
(SAMPADA).

The Government of India has allowed 100 per cent FDI in marketing of food products and in food product e-commerce
under the automatic route.

Achievements in the sector

The Electronic National Agriculture Market (eNAM) was launched in April 2016 to create a unified national market for
agricultural commodities by networking existing APMCs. Up to May 2018, 9.87 million farmers, 109,725 traders were
registered on the e-NAM platform. 585 mandis in India have been linked while 415 additional mandis will be linked in
2018-19 and 2019-20.

Agriculture storage capacity in India increased at 4 per cent CAGR between 2014-17 to reach 131.8 million metric
tonnes.

Coffee exports reached record 395,000 tonnes in 2017-18.

Between 2014-18, 10,000 clusters were approved under the Paramparagat Krishi Vikas Yojana (PKVY).

Between 2014-15 and 2017-18 (up to December 2017), capacity of 2.3 million metric tonnes was added in godowns
while steel silos with a capacity of 625,000 were also created during the same period.

Around 100 million Soil Health Cards (SHCs) have been distributed in the country during 2015-17 and a soil health
mobile app has been launched to help Indian farmers.

Road Ahead

India is expected to achieve the ambitious goal of doubling farm income by 2022. The agriculture sector in India is
expected to generate better momentum in the next few years due to increased investments in agricultural
infrastructure such as irrigation facilities, warehousing and cold storage. Furthermore, the growing use of genetically
modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the
coming few years due to concerted efforts of scientists to get early-maturing varieties of pulses and the increase in
minimum support price.

The government of India targets to increase the average income of a farmer household at current prices to Rs 219,724
(US$ 3,420.21) by 2022-23 from Rs 96,703 (US$ 1,505.27) in 2015-16.

Going forward, the adoption of food safety and quality assurance mechanisms such as Total Quality Management
(TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing
Practices (GMP) and Good Hygienic Practices (GHP) by the food processing industry will offer several benefits.
Automobile Industry in India

Introduction
The Indian auto industry became the 4th largest in the world with sales increasing 9.5 per cent year-on-year to 4.02
million units (excluding two wheelers) in 2017. It was the 7th largest manufacturer of commercial vehicles in 2017.
The Two Wheelers segment dominates the market in terms of volume owing to a growing middle class and a young
population. Moreover, the growing interest of the companies in exploring the rural markets further aided the growth
of the sector.
India is also a prominent auto exporter and has strong export growth expectations for the near future. Automobile
exports grew 20.78 per cent during April-November 2018. It is expected to grow at a CAGR of 3.05 per cent during
2016-2026. In addition, several initiatives by the Government of India and the major automobile players in the Indian
market are expected to make India a leader in the two-wheeler and four wheeler market in the world by 2020.

Market Size
Domestic automobile production increased at 7.08 per cent CAGR between FY13-18 with 29.07 million vehicles
manufactured in the country in FY18. During April-November 2018, automobile production increased 12.53 per cent
year-on-year to reach 21.95 million vehicle units.
Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-18 with 24.97 million vehicles
getting sold in FY18. During April-November 2018, highest year-on-year growth in domestic sales among all the
categories was recorded in commercial vehicles at 31.49 per cent followed by 25.16 per cent year-on-year growth in
the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18. . During January-September 2018, BMW registered
a growth of 11 per cent year-on-year in its sales in India at 7,915 units. Mercedes Benz ranked first in sales satisfaction
in the luxury vehicles segment according to J D Power 2018 India sales satisfaction index (luxury).
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18.
Investments

In order to keep up with the growing demand, several auto makers have started investing heavily in various segments
of the industry during the last few months. The industry has attracted Foreign Direct Investment (FDI) worth US$ 19.29
billion during the period April 2000 to June 2018, according to data released by Department of Industrial Policy and
Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile sector in India are as follows:
 Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$ 155.20 million) to launch 20-25 new models
across various commercial vehicle categories in 2018-19.
 Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC Motor has also announced to invest US$ 310 million
in India.
 Mercedes Benz has increased the manufacturing capacity of its Chakan Plant to 20,000 units per year, highest for any
luxury car manufacturing in India.
 As of October 2018, Honda Motors Company is planning to set up its third factory in India for launching hybrid and
electric vehicles with the cost of Rs 9,200 crore (US$ 1.31 billion), its largest investment in India so far.

Government Initiatives
The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under
the automatic route.
Some of the recent initiatives taken by the Government of India are -

 The government aims to develop India as a global manufacturing centre and an R&D hub.
 Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$ 388.5 million to enable
the industry to be on par with global standards
 The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for introduction of
electric vehicles (EVs) in their public transport systems under the FAME (Faster Adoption and Manufacturing of
(Hybrid) and Electric Vehicles in India) scheme. The government will also set up incubation centre for start-ups working
in electric vehicles space.

Achievements
Following are the achievements of the government in the past four years:

 Number of vehicles supported under FAME scheme increased from 5,197 in June 2015 to 192,451 in March 2018.
During 2017-18, 47,912 two-wheelers, 2,202 three-wheelers, 185 four-wheelers and 10 light commercial vehicles
were supported under FAME scheme.
 Under National Automotive Testing And R&D Infrastructure Project (NATRIP), following testing and research centres
have been established in the country since 2015
o International Centre for Automotive Technology (ICAT), Manesar
o National Institute for Automotive Inspection, Maintenance & Training (NIAIMT), Silchar
o National Automotive Testing Tracks (NATRAX), Indore
o Automotive Research Association of India (ARAI), Pune
o Global Automotive Research Centre (GARC), Chennai
 SAMARTH Udyog – Industry 4.0 centres: ‘Demo cum experience’ centres are being set up in the country for promoting
smart and advanced manufacturing helping SMEs to implement Industry 4.0 (automation and data exchange in
manufacturing technology).

Road Ahead
The automobile industry is supported by various factors such as availability of skilled labour at low cost, robust R&D
centres and low cost steel production. The industry also provides great opportunities for investment and direct and
indirect employment to skilled and unskilled labour.
 Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16-18.18 trillion (US$
251.4-282.8 billion) by 2026. Two-wheelers are expected to grow 9 per cent in 2018.

Auto Components Industry in India

Introduction
The Indian auto-components industry has experienced healthy growth over the last few years. The auto-component
industry of India has expanded by 18.3 per cent to reach at a level of US$ 51.2 billion in FY 2017-18.
The auto-components industry accounts for 2.3 per cent of India’s Gross Domestic Product (GDP) and employs as
many as 1.5 million people directly and indirectly each. A stable government framework, increased purchasing power,
large domestic market, and an ever increasing development in infrastructure have made India a favourable destination
for investment.
Market Size
The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The
organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision
instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket
category.
The total value of India’s automotive exports stood at US$ 13.5 billion in 2017-18 as compared US$ 10.9 billion in the
year 2016-17. This has been driven by strong growth in the domestic market and increasing globalisation (including
exports) of several Indian suppliers. Growth is further expected to accelerate to 8-10 per cent in FY19 due to pick up
in global scenario. **
According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components
industry is expected to register a turnover of US$ 100 billion by 2020 backed by strong exports ranging between US$
80- US$ 100 billion by 2026.
Investments
The Foreign Direct Investment (FDI) inflows into the Indian automotive* industry during the period April 2000 – June
2018 were recorded at US$ 19.29 billion, as per data by the Department of Industrial Policy and Promotion (DIPP).
Some of the recent investments made/planned in the Indian auto components sector are as follows:

 Schaeffler India, the Indian arm of Germany’s automotive and industrial parts maker, is planning to invest Rs 300 crore
(US$ 46.66 million) per annum over FY18-19.
 As of December 2018, German automotive major Continental has planned investments of Rs 180 crore (US$ 25.65
million) for setting up a premium surface materials facility in Pune. The facility will have an initial capacity of five
million square metres and is expected to start production in 2020.
 In October 2018, IMI Precision Engineering inaugurated its second largest manufacturing facility in the Asia Pacific
region. The company is planning to expand its product and technical offerings over the course of the next few years.
 As of September 2018, air-compressor manufacturer Elgi Equipments is going to invest Rs 18 crore (US$ 2.56 million)
for setting up of a motor production facility in India. The facility is expected to be commissioned in Q1 FY20.

Achievements
Following are the achievements of the government in the past four years:

 The FAME – India Scheme formulated by Department of Heavy Industry led to a continuous increase in registered
OEMs and vehicle models. Also, the scheme enhanced the sales of electric vehicles and about 261,507 electric/hybrid
vehicles were supported under the scheme up to December 6, 2018.
 Under National Automotive Testing and R&D Infrastructure Project (NATRiP) various facilities including passive safety
labs comprising of crash core facility and crash instrumentations including dummies were established at ICAT-Manesar
& ARAI-Pune
 To give a fresh thrust to e-mobility in public transport, Department of Heavy Industry announced the launch of public
& shared mobility based on electric powertrain.

Government Initiatives
The Government of India’s Automotive Mission Plan (AMP) 2006–2016 has come a long way in ensuring growth for
the sector. Indian Automobile industry is expected to achieve a turnover of $300 billion by the year 2026 and will grow
at a rate of CAGR 15 per cent from its current revenue of $74 billion.
Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help the automotive industry to
grow and will benefit Indian economy in the following ways:-

 Contribution of auto industry in the country’s GDP will rise to over 12 per cent
 Around 65 million incremental number of direct and indirect jobs will be created
 End of life Policy will be implemented for old vehicles

Road Ahead
The rapidly globalising world is opening up newer avenues for the transportation industry, especially while it makes a
shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of
transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component
manufacturers, who would need to adapt to the change via systematic research and development.
The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component
makers are well positioned to benefit from the globalisation of the sector as exports potential could be increased by
up to US$ 30 billion by 2021E.
Exchange Rate Used: INR 1 = US$ 0.0142 as of Q2 FY19
Notes: ** As per CRISIL Research, * - Includes automobile and auto-components, E – Estimated, SAMARTH - Smart &
Advanced Manufacturing and Rapid Transformation Hub
 Banking Sector in India

Last Updated: December, 2018

Introduction
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and well-regulated. The financial
and economic conditions in the country are far superior to any other country in the world. Credit, market and liquidity
risk studies suggest that Indian banks are generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models like payments and small
finance banks. RBI’s new measures may go a long way in helping the restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s Immediate Payment
Service (IMPS) being the only system at level 5 in the Faster Payments Innovation Index (FPII).*
Market Size
The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49 foreign banks, 56 regional
rural banks, 1,562 urban cooperative banks and 94,384 rural cooperative banks, in addition to cooperative credit
institutions.^^ In FY07-18, total lending increased at a CAGR of 10.94 per cent and total deposits increased at a CAGR
of 11.66 per cent. India’s retail credit market is the fourth largest in the emerging countries. It increased to US$ 281
billion on December 2017 from US$ 181 billion on December 2014.
Investments/developments
Key investments and developments in India’s banking industry include:

 As of September 2018, the Government of India launched India Post Payments Bank (IPPB) and has opened branches
across 650 districts to achieve the objective of financial inclusion.
 The total value of mergers and acquisition during 2017 in NBFC diversified financial services and banking was US$
2,564 billion, US$ 103 million and US$ 79 million respectively @.
 The biggest merger deal of FY17 was in the microfinance segment of IndusInd Bank Limited and Bharat Financial
Inclusion Limited of US$ 2.4 billion @.
 In May 2018, total equity funding's of microfinance sector grew at the rate of 39.88 to Rs 96.31 billion (Rs 4.49 billion)
in 2017-18 from Rs 68.85 billion (US$ 1.03 billion) #.
 Government Initiatives

 As of September 2018, the Government of India has made the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme an
open ended scheme and has also added more incentives.
 The Government of India is planning to inject Rs 42,000 crore (US$ 5.99 billion) in the public sector banks by March
2019 and will infuse the next tranche of recapitalisation by mid-December 2018.

Achievements
Following are the achievements of the government in the year 2017-18:

 To improve infrastructure in villages, 204,000 Point of Sale (PoS) terminals have been sanctioned from the Financial
Inclusion Fund by National Bank for Agriculture & Rural Development (NABARD).
 Between December 2016 and March 2017, a major drive was undertaken to boost use of debit cards, resulting in an
increase in the number of Point of Sale (PoS) terminals by an additional 1.25 million by 2017 end from 1.52 million as
on November 30, 2016.
 The number of total bank accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 333.8 million as
on November 28, 2018.

Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation of reforms are expected
to provide further impetus to growth. All these factors suggest that India’s banking sector is also poised for robust
growth as the rapidly growing business would turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet banking services to the fore. The banking
sector is laying greater emphasis on providing improved services to their clients and also upgrading their technology
infrastructure, in order to enhance the customer’s overall experience as well as give banks a competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion by FY2023 driven by the
five-fold increase in the digital disbursements.
Exchange Rate Used: INR 1 = US$ 0.0142 as on Q2 FY19.
 Indian Consumer Market

Introduction
Indian consumer durables market is broadly segregated into urban and rural markets, and is attracting marketers from
across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically
disadvantaged class. Global corporations view India as one of the key markets from where future growth is likely to
emerge. The growth in India’s consumer market would be primarily driven by a favourable population composition
and increasing disposable incomes.
Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983 in 2012. The maximum consumer
spending is likely to occur in food, housing, consumer durables, and transport and communication sectors.
Market Size

 The growing purchasing power and rising influence of the social media have enabled Indian consumers to splurge on
good things. Import of electronic goods reached US$ 53 billion in FY18.
 Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48 billion) in 2017. India is
one of the largest growing electronics market in the world. Indian electronics market is expected to grow at 41 per
cent CAGR between 2017-20 to reach US$ 400 billion.
 As of FY18, washing machine, refrigerator and air conditioner market in India were estimated around Rs 7,000 crore
(US$ 1.09 billion), Rs 19,500 crore (US$ 3.03 billion) and Rs 20,000 crore (US$ 3.1 billion), respectively.
 India became world's second largest smartphone market with 40.1 million units shipped between July-
September 2018. India is expected to have 829 million smartphone users by 2022.

Investments
According to the data released by the Department of Industrial Policy and Promotion (DIPP), the electronics sector
attracted foreign direct investment (FDI) worth US$ 1.97 billion between April 2000 and June 2018. The S&P BSE
Consumer Durables Index has grown at 20 per cent CAGR between 2010-17.
Following are some recent investments and developments in the Indian consumer market sector.

 India is now the world’s second largest mobile phone manufacturer with presence of 120 factories as of July 2018.
 In July 2018, Samsung announced an investment of Rs 5,000 crore (US$ 745.82 million) for expansion of manufacturing
capacity to 120 million from 68 million devices at its Noida plant in India.
 Intex Technologies will invest around Rs 60 crore (US$ 9.27 million) in 2018 in technology software and Internet of
Things (IoT) startups in India in order to create an ecosystem for its consumer appliances and mobile devices.
 Micromax plans to invest US$ 89.25 million by 2020 for transforming itself into a consumer electronics company.

Government Initiatives

 A draft National Policy on Electronics Policy was released by the Ministry of Electronics & Information Technology in
October 2018.
 A new Consumer Protection Bill has been approved by the Union Cabinet, Government of India that will make the
existing laws more effective with a broader scope.
 The mobile phone industry in India expects that the Government of India's boost to production of battery chargers
will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025.
 The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by amending the M-
SIPS scheme, in order to further incentivise investments in electronics sector, create employment opportunities and
reduce dependence on imports by 2020.
 The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) under the automatic route in
Electronics Systems Design & Manufacturing sector. FDI into single brand retail has been increased from 51 per cent
to 100 per cent; the government is planning to hike FDI limit in multi-brand retail to 51 per cent.

Road Ahead
Indian appliance and consumer electronics (ACE) market is expected to increase at a 9 per cent CAGR to reach Rs 3.15
trillion (US$ 48.37 billion) in 2022. Demand growth is likely to accelerate with rising disposable incomes and easy
access to credit. Increasing electrification of rural areas and wide usability of online sales would also aid growth in
demand.
 E-commerce Industry in India

Introduction
The e-commerce has transformed the way business is done in India. The Indian e-commerce market is expected to
grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much growth of the industry has been triggered by
increasing internet and smartphone penetration. The ongoing digital transformation in the country is expected to
increase India’s total internet user base to 829 million by 2021 from 560.01 million as of September 2018. India’s
internet economy is expected to double from US$125 billion as of April 2017 to US$ 250 billion by 2020, majorly
backed by ecommerce. India’s E-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion
in 2020, growing at an annual rate of 51 per cent, the highest in the world.
Market Size
Propelled by rising smartphone penetration, the launch of 4G networks and increasing consumer wealth, the Indian
e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017 Online retail sales in
India are expected to grow by 31 per cent to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm
Mall.
During 2018, electronics is currently the biggest contributor to online retail sales in India with a share of 48 per cent,
followed closely by apparel at 29 per cent.
Investments/ Developments
Some of the major developments in the Indian e-commerce sector are as follows:

 Flipkart, after getting acquired by Walmart for US$ 16 billion, is expected to launch more offline retail stores in India
to promote private labels in segments such as fashion and electronics. In September 2018, Flipkart acquired Israel
based analytics start-up Upstream Commerce that will help the firm to price and position its products in an efficient
way.
 Paytm has launched its bank - Paytm Payment Bank. Paytm bank is India's first bank with zero charges on online
transactions, no minimum balance requirement and free virtual debit card
 As of June 2018, Google is also planning to enter into the E-commerce space by November 2018. India is expected to
be its first market.
 E-commerce industry in India witnessed 21 private equity and venture capital deals worth US$ 2.1 billion in 2017 and
40 deals worth US$ 1,129 million in the first half of 2018.
 Google and Tata Trust have collaborated for the project ‘Internet Saathi’ to improve internet penetration among rural
women in India
 Government initiatives
Since 2014, the Government of India has announced various initiatives namely, Digital India, Make in India, Start-up
India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support
the e-commerce growth in the country. Some of the major initiatives taken by the government to promote the e-
commerce sector in India are as follows:

 In order to increase the participation of foreign players in the e-commerce field, the Indian Government hiked the
limit of foreign direct investment (FDI) in the E-commerce marketplace model for up to 100 per cent (in B2B models).
 In the Union Budget of 2018-19, government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to
provide broadband services to 150,000 gram panchayats
 As of August 2018, the government is working on the second draft of e-commerce policy, incorporating inputs from
various industry stakeholders.

Achievements
Following are the achievements of the government in the past four years:

 Under the Digital India movement, government launched various initiatives like Udaan, Umang, Start-up India Portal
etc.
 Under the project ‘Internet Saathi’, the government has influenced over 16 million women in India and reached
166,000 villages
 Udaan, a B2B online trade platform that connect small and medium size manufacturers and wholesalers with online
retailers and also provide them logistics, payments and technology support, has sellers in over 80 cities of India and
delivers to over 500 cities.
 According to the UN’s eGovernance index, India has jumped 11 positions to 107 in 2016 from 2018 in 2014.
 The government introduced Bharat Interface for Money (BHIM), a simple mobile based platform for digital payments.

Road Ahead
The e-commerce industry been directly impacting the micro, small & medium enterprises (MSME) in India by providing
means of financing, technology and training and has a favourable cascading effect on other industries as well. The
Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become
the second largest e-commerce market in the world by 2034. Technology enabled innovations like digital payments,
hyper-local logistics, analytics driven customer engagement and digital advertisements will likely support the growth
in the sector. The growth in e-commerce sector will also boost employment, increase revenues from export, increase
tax collection by ex-chequers, and provide better products and services to customers in the long-term.
Engineering Industry in India

Last Updated: December, 2018

Introduction
The Indian Engineering sector has witnessed a remarkable growth over the last few years driven by increased
investments in infrastructure and industrial production. The engineering sector, being closely associated with the
manufacturing and infrastructure sectors, is of strategic importance to India’s economy.
India on its quest to become a global superpower has made significant strides towards the development of its
engineering sector. The Government of India has appointed the Engineering Export Promotion Council (EEPC) as the
apex body in charge of promotion of engineering goods, products and services from India. India exports transport
equipment, capital goods, other machinery/equipment and light engineering products such as castings, forgings and
fasteners to various countries of the world. The Indian semiconductor industry offers high growth potential areas as
the industries which source semiconductors as inputs are themselves witnessing high demand.
India became a permanent member of the Washington Accord (WA) in June 2014. The country is now a part of an
exclusive group of 17 countries who are permanent signatories of the WA, an elite international agreement on
engineering studies and mobility of engineers.
Market size
Turnover of capital goods industry is estimated to have reached US$ 70 billion in 2017^.
India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total
exports. Engineering exports for the period of FY18 were US$ 76.20 billion as against US$ 65.23 million in the same
period previous year. Exports of electrical machinery and equipment grew at a CAGR of 7.00 per cent during FY10-18
to reach US$ 6.7 billion in FY18. The figure stood at US$ 5.61 billion for Apr-Nov 2018.
The electrical equipment industry observed a witnessed a record seven-year high growth of 12.8 per cent in 2017-18,
on the back of increase in government spending on rural and household electrification schemes and programmes to
improve power distribution.
Construction equipment industry of India is expected to grow over 18 per cent in 2018-19.
Investments
The engineering sector in India attracts immense interest from foreign players as it enjoys a comparative advantage
in terms of manufacturing costs, technology and innovation. The above, coupled with favourable regulatory policies
and growth in the manufacturing sector has enabled several foreign players to invest in India.
The Foreign Direct Investment (FDI) inflows into India's miscellaneous mechanical and engineering industries during
April 2000 to June 2018 stood at around US$ 3.45 billion, as per data released by the Department of Industries Policy
and Promotion (DIPP).
 In the recent past there have been many major investments and developments in the Indian engineering and design
sector:

 As of December 2018, SANY India, the Indian arm of Beijing-headquartered construction equipment maker SANY
Group, is planning to invest Rs 1,000 crore (US$ 142.49 million) to expand its construction machinery production
capacity to 25,000 units.
 Schneider Electric and Temasek acquired Larsen & Toubro’s (L&T) electrical and automation business in May 2018.

Government Initiatives
The Indian engineering sector is of strategic importance to the economy owing to its intense integration with other
industry segments. The sector has been de-licensed and enjoys 100 per cent FDI. With the aim to boost the
manufacturing sector, the government has relaxed the excise duties on factory gate tax, capital goods, consumer
durables and vehicles.

 In the Union Budget 2018-19, the government allocated US$ 92.22 billion for the infrastructure sector. Allocation to
the defence sector was raised to US$ 45.57 billion under Union Budget 2018-19. In addition, Make in India policy is
being carefully pursued to achieve greater self-sufficiency in the area of defence equipment including air-craft.
 The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by amending the M-
SIPS scheme, in order to further incentivise investments in electronics sector, create employment opportunities and
reduce dependence on imports by 2020.

Road Ahead
Turnover of capital goods industry is expected to increase to US$ 115.17 billion by 2025F. India’s engineering R&D
market will increase from US$ 28 billion in FY18 to US$ 42 billion by FY22F. Sales of construction equipment are
expected to reach 90,115 and 100,000 in 2018 and 2022, respectively, while the market size of construction
equipment industry is expected to grow from US$ 4.3 billion in FY18 to US$ 5 billion by FY20.
Production of machine tools industry is forecasted to increase to Rs 9,000 crore (US$ 1.40 billion) in 2018-19.

Financial Services in India

 Introduction

India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial
services firms and new entities entering the market. The sector comprises commercial banks, insurance companies,
non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The
banking regulator has allowed new entities such as payments banks to be created recently thereby adding to the types
of entities operating in the sector. However, the financial sector in India is predominantly a banking sector with
commercial banks accounting for more than 64 per cent of the total assets held by the financial system.
The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The
Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro,
Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for Micro
and Small Enterprises, issuing guideline to banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by both government and private sector, India
is undoubtedly one of the world's most vibrant capital markets. In 2017,a new portal named 'Udyami Mitra' has been
launched by the Small Industries Development Bank of India (SIDBI) with the aim of improving credit availability to
Micro, Small and Medium Enterprises' (MSMEs) in the country. India has scored a perfect 10 in protecting
shareholders' rights on the back of reforms implemented by Securities and Exchange Board of India (SEBI).
Market Size
The Mutual Fund (MF) industry in India has seen rapid growth in Assets Under Management (AUM). Total AUM of the
industry stood at Rs 24.03 trillion (US$ 342.01 billion) between April-November 2018. At the same time the number
of Mutual fund (MF) equity portfolios reached a high of 74.6 million as of June 2018.
Another crucial component of India’s financial industry is the insurance industry. The insurance industry has been
expanding at a fast pace. The total first year premium of life insurance companies reached Rs 193,866.23 crore (US$
30.10 billion) during FY18.
Along with the secondary market, the market for Initial Public Offers (IPOs) has also witnessed rapid expansion. The
total amount of Initial Public Offerings (IPO) increased to US$ 1.2 billion raised from 37 between April – June 2018.
Over the past few years India has witnessed a huge increase in Mergers and Acquisition (M&A) activity. In H12018, 74
deals of acquisition took place in financial sector. The total value of such transactions was US$ 4.166 billion. *
Furthermore, India’s leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with Ebix Inc to build a
robust insurance distribution network in the country through a new distribution exchange platform.
Investments/Developments

 Investments by Foreign Portfolio Investors (FPIs) in Indian capital markets have reached Rs 6,310 crore (US$ 899.12
million) up to November 22, 2018.
 As of October 2018, the Financial Inclusion Lab has selected 11 fintech innovators with an investment of US$ 9.5
million promoted by the IIM-Ahmedabad's Bharat Inclusion Initiative (BII) along with JP Morgan, Michael and Susan
Dell Foundation, and the Bill and Melinda Gates Foundation.
 The private equity and venture capital (PE/VC) investments reached US$ 25.20 billion between January to October
2018.*

Government Initiatives

 In December, 2018, Securities and Exchange Board of India (SEBI) proposed direct overseas listing of Indian companies
and other regulatory changes.
 Bombay Stock Exchange (BSE) introduced weekly futures and options contracts on Sensex 50 index from October 26,
2018.
 In September 2018, SEBI asked for recommendations to strengthen rules which will enhance the overall governance
standards for issuers, intermediaries or infrastructure providers in the financial market.
 The Government of India launched India Post Payments Bank (IPPB), to provide every district with one branch which
will help increase rural penetration. As of August 2018, two branches out of 650 branches are already operational.

Road Ahead

 India is today one of the most vibrant global economies, on the back of robust banking and insurance sectors. The
relaxation of foreign investment rules has received a positive response from the insurance sector, with many
companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming
quarters there could be a series of joint venture deals between global insurance giants and local players.
 The Association of Mutual Funds in India (AMFI) is targeting nearly five fold growth in assets under management
(AUM) to Rs 95 lakh crore (US$ 1.47 trillion) and a more than three times growth in investor accounts to 130 million
by 2025.
 India's mobile wallet industry is estimated to grow at a Compound Annual Growth Rate (CAGR) of 150 per cent to
reach US$ 4.4 billion by 2022 while mobile wallet transactions to touch Rs 32 trillion (USD $ 492.6 billion) by 2022.

FMCG Industry in India

Introduction
Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with Household and
Personal Care accounting for 50 per cent of FMCG sales in India. Growing awareness, easier access and changing
lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around
55 per cent) is the largest contributor to the overall revenue generated by the FMCG sector in India However, in the
last few years, the FMCG market has grown at a faster pace in rural India compared with urban India. Semi-urban and
rural segments are growing at a rapid pace and FMCG products account for 50 per cent of total rural spending.
Market Size
The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern
trade expected to grow at 20 per cent - 25 per cent per annum, which is likely to boost revenues of FMCG companies.
Revenues of FMCG sector reached Rs 3.4 lakh crore (US$ 52.75 billion) in FY18 and are estimated to reach US$ 103.7
 billion in 2020. The sector witnessed growth of 16.5 per cent in value terms between July-September 2018; supported
by moderate inflation, increase in private consumption and rural income. @
Investments/ Developments
The government has allowed 100 per cent Foreign Direct Investment (FDI) in food processing and single-brand retail
and 51 per cent in multi-brand retail. This would bolster employment and supply chains, and also provide high visibility
for FMCG brands in organised retail markets, bolstering consumer spending and encouraging more product launches.
The sector witnessed healthy FDI inflows of US$ 13.63 billion, during April 2000 to June 2018. Some of the recent
developments in the FMCG sector are as follows:

 Patanjali will spend US$743.72 million in various food parks in Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh
and Uttar Pradesh.
 Dabur is planning to invest Rs 250-300 crore (US$ 38.79-46.55 million) in FY19 for capacity expansion and is also
planning to make acquisitions in the domestic market.
 In May 2018, RP-Sanjiv Goenka Group created an Rs 1 billion (US$ 14.92 million) venture capital fund to invest in FMCG
start-ups.
 In August 2018, Fonterra announced a joint venture with Future Consumer Ltd which will produce a range of consumer
and foodservice dairy products.

Government Initiatives
Some of the major initiatives taken by the government to promote the FMCG sector in India are as follows:

 The Government of India has approved 100 per cent Foreign Direct Investment (FDI) in the cash and carry segment
and in single-brand retail along with 51 per cent FDI in multi-brand retail.
 The Government of India has drafted a new Consumer Protection Bill with special emphasis on setting up an extensive
mechanism to ensure simple, speedy, accessible, affordable and timely delivery of justice to consumers.
 The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG products such as Soap,
Toothpaste and Hair oil now come under 18 per cent tax bracket against the previous 23-24 per cent rate.
 The GST is expected to transform logistics in the FMCG sector into a modern and efficient model as all major
corporations are remodeling their operations into larger logistics and warehousing.

Achievements
Following are the achievements of the government in the past four years:

 Number of mega food parks ready increased from 2 between 2008-14 to 13 between 2014-18.
 Preservation and processing capacity increased from 308,000 during 2008-14 to 1.41 million during 2014-18.
 The number of food labs increased from 31 during 2008-14 to 42 during 2014-18.

Road Ahead
Rural consumption has increased, led by a combination of increasing incomes and higher aspiration levels; there is an
increased demand for branded products in rural India. The rural FMCG market in India is expected to grow to US$ 220
billion by 2025 from US$ 23.6 billion in FY18. In FY18, FMCG’s rural segment contributed an estimated 10 per cent of
the total income and it is forecasted to contribute 15-16 per cent in FY 19. ^ FMCG sector is forecasted to grow at 12-
13 per cent between September–December 2018. @
On the other hand, with the share of unorganised market in the FMCG sector falling, the organised sector growth is
expected to rise with increased level of brand consciousness, also augmented by the growth in modern retail.
 Another major factor propelling the demand for food services in India is the growing youth population, primarily in
the country’s urban regions. India has a large base of young consumers who form the majority of the workforce and,
due to time constraints, barely get time for cooking.
Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has
contributed in a big way, facilitating a cheaper and more convenient means to increase a company’s reach. It is
estimated that 40 per cent of all FMCG consumption in India will be online by 2020. The online FMCG market is
forecasted to reach US$ 45 billion in 2020 from US$ 20 billion in 2017.
It is estimated that India will gain US$ 15 billion a year by implementing the Goods and Services Tax. GST and
demonetization are expected to drive demand, both in the rural and urban areas, and economic growth in a structured
manner in the long term and improve performance of companies within the sector.

Infrastructure Sector in India

Introduction
Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India’s
overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound
creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and
urban infrastructure development. In 2018, India ranked 44th out of 167 countries in World Bank's Logistics
Performance Index (LPI) 2018.
Market Size
Foreign Direct Investment (FDI) received in Construction Development sector (townships, housing, built up
infrastructure and construction development projects) from April 2000 to June 2018 stood at US$ 24.87 billion,
according to the Department of Industrial Policy and Promotion (DIPP). The logistics sector in India is growing at a
CAGR of 10.5 per cent annually and is expected to reach US$ 215 billion in 2020.
Investments
India has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have
sustainable development in the country. India is witnessing significant interest from international investors in the
infrastructure space. Some key investments in the sector are listed below.

 In June 2018, the Asian Infrastructure Investment Bank (AIIB) has announced US$ 200 million investment into the
National Investment & Infrastructure Fund (NIIF).
 Private equity and venture capital (PE/VC) investments in the infrastructure sector reached US$ 1,827 million during
January-November 2018
 Indian infrastructure sector witnessed 91 M&A deals worth US$ 5.4 billion in 2017

Government Initiatives
The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy
and urban transport.
The Government of India is taking every possible initiative to boost the infrastructure sector. Some of the steps taken
in the recent past are being discussed hereafter.

 Announcements in Union Budget 2018-19:

o Massive push to the infrastructure sector by allocating Rs 5.97 lakh crore (US$ 92.22 billion) for the sector.
o Railways received the highest ever budgetary allocation of Rs 1.48 trillion (US$ 22.86 billion).
o Rs 16,000 crore (US$2.47 billion) towards Sahaj Bijli Har Ghar Yojana (Saubhagya) scheme. The scheme aims to achieve
universal household electrification in the country.
o Rs 4,200 crore (US$ 648.75 billion) to increase capacity of Green Energy Corridor Project along with other wind and
solar power projects.
o Allocation of Rs 10,000 crore (US$ 1.55 billion) to boost telecom infrastructure.
 A new committee to lay down standards for metro rail systems was approved in June 2018. As of August 2018, 22
metro rail projects are ongoing or are under construction.
 Rs 2.05 lakh crore (US$ 31.81 billion) will be invested in the smart cities mission. All 100 cities have been selected as
of June 2018.
 The Government of India is working to ensure a good living habitat for the poor in the country and has launched new
flagship urban mission, the Pradhan Mantri Awas Yojana (Urban). In May 2018, construction of additional 150,000
affordable houses was sanctioned under Pradhan Mantri Awas Yojana (PMAY), Urban.

Achievements
Following are the achievements of the government in the past four years:

 The total national highways length increased to 122,434 kms in FY18 from 92,851 kms in FY14.
 India’s rank jumped to 24 in 2018 from 137 in 2014 on World Bank’s Ease of doing business - "Getting Electricity"
ranking.
 Energy deficit reduced to 0.7 per cent in FY18 from 4.2 per cent in FY14.
 Number of airports has increased to 102 in 2018.

Road Ahead
India’s national highway network is expected to cover 50,000 kilometres by 2019. National highway construction in
India has increased by 20 per cent year-on-year in 2017-18.
India and Japan have joined hands for infrastructure development in India's north-eastern states and are also setting
up an India-Japan Coordination Forum for Development of North East to undertake strategic infrastructure projects
in the northeast.
 Textile Industry & Market Growth in India

Introduction
India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. India's overall
textile exports during FY 2017-18 stood at US$ 39.2 billion.
The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the
spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralised
power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the
textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country
in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The
Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments,
both within India and across the world.
Market Size
The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 250 billion by
2019. India’s textiles industry contributed seven per cent of the industry output (in value terms) of India in 2017-18.It
contributed two per cent to the GDP of India and employs more than 45 million people in 2017-18.The sector
contributed 15 per cent to the export earnings of India in 2017-18.
The production of raw cotton in India is estimated to have reached 34.9 million bales in FY18^.
Investment
The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and
printed) attracted Foreign Direct Investment (FDI) worth US$ 2.97 billion during April 2000 to June 2018.
Some of the major investments in the Indian textiles industry are as follows:

 In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June 2017.
 The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job
opportunities and attract investments worth Rs 800.00 billion (US$ 11.93 billion) during 2018-2020. As of August 2018,
it generated additional investments worth Rs 253.45 billion (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$
854.42 million).

Government Initiatives
The Indian government has come up with a number of export promotion policies for the textiles sector. It has also
allowed 100 per cent FDI in the Indian textiles sector under the automatic route.
Initiatives taken by Government of India are:
 The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from
India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent
to 4 per cent.
 As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on
501 textile products, to boost Make in India and indigenous production.
 The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job
opportunity and attract investments worth Rs 80,000 crore (US$ 11.93 billion) during 2018-2020. As of August 2018 it
generated additional investments worth Rs 25,345 crore (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$
854.42 million).
 The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-
TUFS), scheme is estimated to create employment for 35 lakh people and enable investments worth Rs 95,000 crore
(US$ 14.17 billion) by 2022.
 Integrated Wool Development Programme (IWDP) approved by Government of India to provide support to the wool
sector starting from wool rearer to end consumer which aims to enhance the quality and increase the production
during 2017-18 and 2019-20.
 The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development
scheme named 'Scheme for Capacity Building in Textile Sector (SCBTS)' with an outlay of Rs 1,300 crore (US$ 202.9
million) from 2017-18 to 2019-20.

Achievements
Following are the achievements of the government in the past four years:

 I-ATUFS, a web-based claims monitoring and tracking mechanism was launched on April 21, 2016.
 381 new block level clusters were sanctioned.
 20 new textile parks were sanctioned
 Employment increased to 8.62 million in FY18 from 8.03 in FY15.

Road Ahead
The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as
export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid
growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into
the Indian market.
High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating
a huge domestic market.
 Manufacturing Sector in India

Introduction
Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India, Mr Narendra Modi,
had launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global
recognition to the Indian economy. India is expected to become the fifth largest manufacturing country in the world
by the end of year 2020*.
Market Size
The Gross Value Added (GVA) at basic current prices from the manufacturing sector in India grew at a CAGR of 4.34
per cent during FY12 and FY18 as per the second advance estimates of annual national income published by the
Government of India. During April-September 2018, GVA from manufacturing at current prices grew 14.8 per cent
year-on-year to Rs 138.99 trillion (US$ 198.05 billion). Under the Make in India initiative, the Government of India
aims to increase the share of the manufacturing sector to the gross domestic product (GDP) to 25 per cent by 2022,
from 16 per cent, and to create 100 million new jobs by 2022. Business conditions in the Indian manufacturing sector
continue to remain positive.
Investments
With the help of Make in India drive, India is on the path of becoming the hub for hi-tech manufacturing as global
giants such as GE, Siemens, HTC, Toshiba, and Boeing have either set up or are in process of setting up manufacturing
plants in India, attracted by India's market of more than a billion consumers and increasing purchasing power.
Cumulative Foreign Direct Investment (FDI) in India’s manufacturing sector reached US$ 76.82 billion during April
2000-June 2018.
India has become one of the most attractive destinations for investments in the manufacturing sector. Some of the
major investments and developments in this sector in the recent past are:

 India’s manufacturing PMI increased for the third consecutive month to 54.0 in November 2018 from 53.1 in October
2018. The expansion was driven by strong inflows of new orders which led to higher production and input purchasing.
 As of December 2018, premium smartphone maker OnePlus is anticipating that India will become its largest Research
and Development (R&D) base within the next three years.
 As of October 2018, Filatex India, a polymer manufacturer, is planning to undertake forward integration by setting up
a fabric manufacturing and processing unit.
 As of August 2018, IISC’s Society of Innovation and Development (SID) and WIPRO 3D are collaborating to produce
India’s first industrial scale 3D printing machine.
 For its Commercial Vehicles, Ashok Leyland is utilising machine learning algorithms and its newly created telematics
unit to improve the performance of the vehicle, driver and so on.

Government Initiatives
The Government of India has taken several initiatives to promote a healthy environment for the growth of
manufacturing sector in the country. Some of the notable initiatives and developments are:

 In October 2018, the Government of India released the draft National Policy on Electronics (NPE) which has envisaged
creation of a US$ 400 billion electronics manufacturing industry in the country by 2025.
 In September 2018, the Government of India exempted 35 machine parts from basic custom duty in order to boost
mobile handset production in the country.
 Government of India is in the process of coming up with a new industrial policy which envisions development of a
globally competitive Indian industry. As of December 2018, the policy has been sent to the Union Cabinet for approval.
 In Union Budget 2018-19, the Government of India reduced the income tax rate to 25 per cent for all companies having
a turnover of up to Rs 250 crore (US$ 38.75 million).
 Under the Mid-Term Review of Foreign Trade Policy (2015-20), the Government of India increased export incentives
available to labour intensive MSME sectors by 2 per cent.
 The Government of India has launched a phased manufacturing programme (PMP) aimed at adding more smartphone
components under the Make in India initiative thereby giving a push to the domestic manufacturing of mobile
handsets.
 The Government of India is in talks with stakeholders to further ease foreign direct investment (FDI) in defence under
the automatic route to 51 per cent from the current 49 per cent, in order to give a boost to the Make in India initiative
and to generate employment.
 The Ministry of Defence, Government of India, approved the “Strategic Partnership” model which will enable private
companies to tie up with foreign players for manufacturing submarines, fighter jets, helicopters and armoured
vehicles.
 The Union Cabinet has approved the Modified Special Incentive Package Scheme (M-SIPS) in which, proposals will be
accepted till December 2018 or up to an incentive commitment limit of Rs 10,000 crore (US$ 1.5 billion).

Road Ahead
India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and
automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country.
The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025 and India is expected to rank
amongst the top three growth economies and manufacturing destination of the world by the year 2020. The
implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of US$ 2.5 trillion
along with a population of 1.32 billion people, which will be a big draw for investors.
With impetus on developing industrial corridors and smart cities, the government aims to ensure holistic development
of the nation. The corridors would further assist in integrating, monitoring and developing a conducive environment
for the industrial development and will promote advance practices in manufacturing.
 Indian Pharmaceutical Industry

Last Updated: January, 2019

Introduction
India is the largest provider of generic drugs globally. Indian pharmaceutical sector 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 UK.
India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists
and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent
of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by
Indian pharmaceutical firms.
Market Size
The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s pharmaceutical industry is expected to
expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion. India’s pharmaceutical exports stood at US$
17.27 billion in FY18 and have reached US$ 10.80 billion in FY19 (up to October 2018). Pharmaceutical exports include
bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgicals.
Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug
Administration (USFDA) in 2017. The country accounts for around 30 per cent (by volume) and about 10 per cent
(value) in the US$ 70-80 billion US generics market.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and
bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by
2025.

Investments and Recent Developments

The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the
pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical
devices subject to certain conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 15.83 billion between April 2000
and June 2018, according to data released by the Department of Industrial Policy and Promotion (DIPP).
Some of the recent developments/investments in the Indian pharmaceutical sector are as follows:

 Between Jul-Sep 2018, Indian pharma sector witnessed 39 PE investment deals worth US$ 217 million.
 Investment (as % of sales) in research & development by Indian pharma companies* increased from 5.3 per cent in
FY12 to 8.5 per cent in FY18.
 In 2017, Indian pharmaceutical sector witnessed 46 merger & acquisition (M&A) deals worth US$ 1.47 billion
 The exports of Indian pharmaceutical industry to the US will get a boost, as branded drugs worth US$ 55 billion will
become off-patent during 2017-2019.

Government Initiatives
Some of the initiatives taken by the government to promote the pharmaceutical sector in India are as follows:

 In October 2018, the Uttar Pradesh Government announced that it will set up six pharma parks in the state and has
received investment commitments of more than Rs 5,000-6,000 crore (US$ 712-855 million) for the same.
 The National Health Protection Scheme is largest government funded healthcare programme in the world, which is
expected to benefit 100 million poor families in the country by providing a cover of up to Rs 5 lakh (US$ 7,723.2) per
family per year for secondary and tertiary care hospitalisation. The programme was announced in Union Budget 2018-
19.
 In March 2018, the Drug Controller General of India (DCGI) announced its plans to start a single-window facility to
provide consents, approvals and other information. The move is aimed at giving a push to the Make in India initiative.
 The Government of India is planning to set up an electronic platform to regulate online pharmacies under a new policy,
in order to stop any misuse due to easy availability.
 The Government of India unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug
manufacture. Approval time for new facilities has been reduced to boost investments.
 The government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing
Authority to deal with the issue of affordability and availability of medicines.

Road Ahead
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.
Going forward, better growth in domestic sales would also depend on the ability of companies to align their product
portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and
anti-cancers that are on the rise.
The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy
introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian
pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive
vaccines also augurs well for the pharmaceutical companies.