Companies & Sectors
FDI in Railways: specific areas in which the funding will help

It is never too late to buy the latest and most modern equipment available, to get the job done in the Railways and the funding through FDI can help in this

Recently, Moneylife carried a story on the prospects of foreign direct investment (FDI) in the Indian Railways. As mentioned therein, the Department of Industrial Policy and Promotion had felt that the Railway Ministry's response to the draft cabinet note was confusing and therefore, it needed some more clarifications before further action could be taken. This is likely to take some more time, but in the meanwhile, it would help matters to review and consider what areas FDI participation would truly help India.


According to information available, rail wagons are designed to carry a load of pre-defined capacity plus nine tonnes with leeway to load one more tonne without any overload penalty across the entire railway network, as per the interim budget, presented recently.


The average load carried per wagon is about 62 tonnes though some wagons carry about 67 tonnes. As per a railway official, as reported in the press, a capacity creation of 15 million tonnes (mt) will account for about 30% of the 50 mt incremental loading that the railways aim to move during 2014-15. They have set a target to achieve 1,101 mt of cargo to be moved in this fiscal year.


However, in order to carry higher load per wagon, the Railways need to invest in wagons, improve rail tracks and bridges. For this purpose, Railways propose a market borrowing of Rs12,800 crore against Rs14,000 crore last year, to procure rolling stocks, including wagons, locomotives and coaches. Should the need arise, they will revise the target and borrowing accordingly.


One of the biggest problems that Railways have faced continuously is the issue relating to extension of rail-track laying, for which there are no indigenous technology or capacity. In fact, worldwide, there are only a few companies who can do this job meticulously and who are in great demand. The three principal companies are reported to be Harsco Corporation of the US, ETF of France and China Railway Shanghai Design Institute Group Company. The railway track laying machines are manufactured by the above three major companies, who, on obtaining overseas contracts, bring in their equipment, lay the track, complete their job on schedule, and take back the equipment, to another location for a new assignment!


Readers may recall that for the Eastern Railway Freight Corridor, according to information available, there are 16 bidders, both Indian and foreign, but most of whom have taken supporting bids from two of the above named specialists in the field. This corridor is likely to be completed in four years' time after the award.


According to an official of the Railways, as reported in the media, there are 35,000 route Kms that cover 70% of rail lines engaged in carrying freight allow for higher carrying capacity. The load per wagon will increase only by about 2 tonnes, as the routes currently permit 2 tonnes less loads per wagon. But to do so, Railways will have to make an incremental investment of Rs2,000 crore to replace old tracks and engage in upgrades in some areas.


With these data in the background, it is hoped, that when the final directives are outlined for the FDI in Railways, the following factors will also play a vital role in the development:


a) to engage in serious joint venture discussions to actually start manufacturing the track laying machinery in India itself - need and scope for continuous exists for a few decades to come;


b) to have a separate joint venture with the same FDI (or the second company) to take contracts for fresh track laying and to renew the old and worn out ones that need to be replaced for improvement and safety;


c) to have a separate organisation only for maintenance and repairs of all railway tracks in the country


d) current passenger coaches are mostly (almost 95-98%) in single decks only; double-decker passenger coaches area novelty; since in many areas the traffic is high, double-deckers would help faster movement


e) if Railways do not have a separate division for procurement of land in the proposed areas for laying tracks and stations, this should be established as a separate entity


All these and more and innovative ideas will take at least a decade or more to accomplish, but it is time we set the goals right and focus to reach those objectives. Just in passing reference may be made that a few years ago, these track laying machines cost between Rs10 crore and Rs30 crore, and why these were not purchased by the Ministry of Railways is a serious issue that they can only answer, since these would be more expensive now. But it is never too late to buy the latest and most modern equipment available, to get the job done!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




3 years ago

Undoubtedly Railway is the backbone of transport system of the India. Prompt decision making and implementation of above mentioned suggestion is the need of the hour.
Productive Article.

jaideep shirali

3 years ago

The suggestions are very useful, most importantly that we should seriously consider manufacture of track laying equipment. If we could make LCA, launch vehicles or ships, I'm sure that our engineers could make track laying equipment. As far as capital is concerned, if the Indian Railways spends less resources on activities unrelated to its business, more internal resources could be used instead of market borrowings. An increase in rail freight movement would really benefit our economy.

As full disclosure nears, doctors’ pay for drug talks plummets

As transparency increases and blockbuster drugs lose patent protection, drug companies have dramatically scaled back payments to doctors for promotional talks. This fall, all drug and medical device companies in the US will be required to report payments to doctors

Some of the US’ largest pharmaceutical companies have slashed payments to health professionals for promotional speeches amid heightened public scrutiny of such spending, a new ProPublica analysis shows.

Eli Lilly and Co.’s payments to speakers dropped by 55 percent, from $47.9 million in 2011 to $21.6 million in 2012.

Pfizer’s speaking payments fell 62 percent over the same period, from nearly $22 million to $8.3 million.

And Novartis, the largest U.S. drug maker as measured by 2012 sales, spent 40 percent less on speakers that year than it did between October 2010 and September 2011, reducing payments from $24.8 million to $14.8 million.

The sharp declines coincide with increased attention from regulators, academic institutions and the public to pharmaceutical company marketing practices. A number of companies have settled federal whistleblower lawsuits in recent years that accused them of improperly marketing their drugs.

In addition, the Physician Payment Sunshine Act, a part of the 2010 health reform law, will soon require all pharmaceutical and medical device companies to publicly report payments to physicians. The first disclosures required under the act are expected in September and will cover the period of August to December 2013.

Within the industry, some companies are reevaluating the role of physician speakers in their marketing repertoire. GlaxoSmithKline announced in December that it would stop paying doctors to speak on behalf of its drugs. Its speaking tab plummeted from $24 million in 2011 to $9.3 million in 2012.

Not all companies have cut speaker payments: Johnson and Johnson increased such spending by 17 percent from 2011 to 2012; AstraZeneca’s payments stayed about flat in 2012 after a steep decline the previous year.

ProPublica has been tracking publicly reported payments by drug companies since 2010 as part of its Dollars for Docs project. Users can search for their doctors to see if they have received compensation from the 15 companies that make such information available online.  (We’ve just updated our application to include payments made through the end of 2012, totaling $2.5 billion. Forest Labs, which only began reporting in 2012, reported speaking payments of $40 million, more than any other company in Dollars for Docs.)

Some companies in the database said their declines have less to do with the Sunshine Act and more to do with the loss of patent protection for key products. Lilly, for example, began facing generic competition to its blockbuster antipsychotic Zyprexa in late 2011. Its antidepressant Cymbalta lost its patent at the end of 2013.

“The value of educational programs tends to be higher when we’re launching a new medicine or we have new clinical data/new indication,” Lilly spokesman J. Scott MacGregor said in an email, adding that the drop in speaking payments also reflects the increased use of web conferencing.

Pfizer’s patent on Lipitor, its top-selling cholesterol drug, expired in 2011.

“Like any other company, our business practices must adapt to the changing nature of our product portfolio, based in part on products going off patent and new products being introduced into the market,” company spokesman Dean Mastrojohn said in an email.


Novartis’ patent for its breast cancer drug Femara expired in 2011, its hypertension drug Diovan in 2012 and its cancer drug Zometa in 2013. In a statement, Novartis said that speaking payments dropped in 2012, in part, because of a shift from big blockbuster drugs that many doctors prescribe toward specialty products prescribed by fewer physicians. Resources were also shifted “to support potential future product launches.”

The industry’s increased emphasis on expensive specialty medications for such conditions as multiple sclerosis or Hepatitis C, has been striking, said Aaron Kesselheim, an assistant professor of medicine at Harvard Medical School. A piece in the New England Journal of Medicine last week noted that half of the 139 drugs approved by the Food and Drug Administration since 2009 were for rare diseases and cancers.

 “It’s possible the number of physicians they need to support sales of these items is less, leading to lower payments overall,” Kesselheim said.

In some cases, companies maintained or made smaller cuts to other forms of physician compensation while pulling back dramatically on speaking payments.  Pfizer’s spending on consultants dropped 9 percent from 2011 to 2012, far less than its payments to speakers. The company’s spending on research stayed essentially the same.

Lilly increased spending on physician researchers by more than 20 percent, while reducing payments to consultants by more than two-thirds.

Many bioethicists and leaders of major academic medical centers frown upon physicians delivering promotional talks for drug companies, saying they turn doctors into sales representatives rather than leaders in research and patient care.

Officials with the Pharmaceutical Research and Manufacturers of America, the industry trade group, dispute this characterization. They said they are working with their member companies to prepare for the Sunshine Act and have created a campaign to promote the value of drug company-doctor collaborations.

“Companies will make their own independent decisions about how to engage professionals,” said Kendra Martello, PhRMA’s deputy vice president of strategic operations.

Scott Liebman, an attorney who advises pharmaceutical companies on the Sunshine Act, said it’s too early to know how much the law’s requirements are affecting company practices, in part because it’s so new. The fact that some companies are cutting back on speaking while preserving their spending on research and consulting suggests that other business forces could be at play, he added.

“It’s very hard to pinpoint exactly why that’s happening,” Liebman said. “I think there’s a lot of potential answers to that. I just don’t know which is the right one.”




R Balakrishnan

3 years ago

A very senior friend of mine, in the pharma industry- says that the position of the 'medical' reps should be done away with- Pharma cos can use the net and the doctors should be made to give annual exams to see that they are up to date with latest developments- New drugs can be sent in the form of mailers to doctors- This could reduce drug prices by thirty percent at least

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