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Good morning. In today’s edition — the 200th anniversary of rail travel and how India could upgrade its railways; changing consumer preferences in the automotive sector; and manufacturing PMI hits a 12-month low.

JANUS VIEW

As Passenger Travel By Rail Marks 200th Anniversary, India Must Consider Upgrading its Tracks

The year 2025 marks the 200th anniversary of passenger travel by rail. While horses used to drag heavy loads along parallel rails, initially of wood and later of steel, at the beginning of the industrial revolution, the arrival of steam locomotives changed transportation forever. On September 27, 1825, a locomotive built by George Stephenson pulled 11 wagons of people and 20 wagons of coal a distance of some 26 miles from Darlington to Stockton along steel tracks (these places are about two hours by car from Manchester). That inaugurated travel by rail.

Since then, trains have changed, themselves, and the world around them. In India, railway construction had begun even before the 1857 revolt, but gained real momentum after it, because the colonial regime realised the importance of quick transport of men and material.  

While many parts of the world have managed to upgrade to high-speed trains, India’s poor-quality tracks stand as an impediment.

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CO:RELATION

Eicher Motors Revs Up

Consumer preferences in India are changing in the automobile sector. Royal Enfield, Eicher Motors’ flagship brand, sold over 1,00,000 vehicles in over 350 cc engine category for the nine months to December 2024. These are premium bikes with fat margins for the company. Sales of bikes with below 350cc engines grew by 2% during the period. That shows that the interest in the premium bike range is growing fast. The company’s share price jumped 7% as it announced the business update to the stock exchanges. The surge in premium engine bikes is essential as overall input costs have increased, making it relatively more manageable for the company to pass them on or absorb them. There is a visible change in consumer preference towards premium bikes and vehicles. Maruti Suzuki, the biggest carmaker in India, has already said it has witnessed a drop in interest in small cars and a strong demand for more oversized vehicles like SUVs and MUVs. It is due to the change in consumer preference.

CORE NUMBER

Rs 246 crore

This is the total incentive payments approved by the government to Mahindra & Mahindra and Tata Motors under the Rs 25,938 crore Production Linked Incentive (PLI) scheme for the auto industry. According to The Economic Times, Mahindra & Mahindra received Rs 104.08 crore and Tata Motors Rs 142.13 crore. Tata Motors' earnings came from sales of Tiago EV, Starbus EV and Ace EV, while M&M’s were linked to electric three-wheelers like Treo. Covering 2023-24 to 2027-28, the scheme promotes advanced automotive technologies like EVs and hydrogen fuel cells, offering incentives of 8 –18%. As of September 2024, the scheme has spurred Rs 20,715 crore in investments and Rs 10,472 crore in sales.

FROM THE PERIPHERY

— 🏭Manufacturing Purchasing Managers’ Index (PMI) fell to 56.4, a 12-month low, according to the HSBC India Manufacturing PMI compiled by S&P Global. It stood at 56.5 in November. This was the slowest growth since December 2023 when it was at 54.9. “Rates of growth remained substantial, however, underpinning further expansions in buying levels and employment. Meanwhile, cost pressures receded and were mild, but charge inflation remained historically high,” the survey said. The rise of container, material and labour costs reportedly rising since November contributed to increased expenses for India’s manufacturers.

—🔍 India’s steel import policies have been scrutinised by the Global Trade Research Initiative (GTRI), which recently in a report highlighted how restrictive regulations are crippling the sector. GTRI said that despite steel imports comprising just 6% of domestic production in FY24, measures like the Quality Control Order (QCO) and import licensing have caused delays and disruption in supply chains. The think tank also argues that small and medium-sized enterprises (SMEs), reliant on imported raw materials, face 25-30% higher domestic prices, forcing many out of business. The report also for an evaluation of the steel industry’s challenges before imposing proposed safeguard duties on steel.

—📉 Indian exporters are facing a liquidity crunch due to high interest rates and declining export finance, reports Business Standard. Export credit fell 5% between March 2022 and March 2024, and priority sector lending (PSL) credit dropped over 40%. Thus extending the interest equalisation scheme by three years and raising pre- and post-shipment credit subsidies from 3% to 5% for MSMEs is suggested. The Federation of Indian Export Organisations (FIEO) has echoed these demands, citing a 5% dip in export credit since March 2022. With US trade policy shifts looming, experts foresee both challenges and opportunities for Indian exporters in global supply chains. 

—🏃 Zairus Master, Chief Business Officer at Mamaearth parent Honasa Consumer, has resigned, effective February 28, 2025, citing personal reasons. His exit follows the October 2024 resignation of Jayant Chauhan, Chief Product and Technology Officer, reflecting continued senior-level churn. These leadership changes come amid significant offline distribution challenges that have impacted the company’s financials. Mamaearth has faced scrutiny over its aggressive inventory push pre-IPO, resulting in unsold stock and raising concerns about financial health and transparency. These developments highlight the brand’s struggle to transition from an online-first business to a retail powerhouse, raising questions about its growth strategy.

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