I must begin with a clarification: the history of Indian business is not as young as India as an independent nation. It goes back several centuries before India opened up its economy in the 1990s, even before it became an independent country. The 1990s were not the first time the Indian economy was open to the globalising forces, nor was this the first time we saw the Indian economy grow. We can begin by asking: did India always lag behind the West in economic development? The simple answer is, no.
In 1700 AD, India’s share in world GDP was 24.4 percent, ahead of China’s share at 22.3 percent (Maddison, 2001). During the hundred years between 1850 and 1950, India was home to the fourth largest cotton mill industry in the world. Trade was the backbone of Indian business, efficiently supported by a flourishing banking and exchange business. India’s trade with the world reached unprecedented volumes, and the economy opened to globalising forces from around the world.
At the dawn of the twentieth century, Indian business firms were not only working with the Britishers, but also entrepreneurs from European and Asian countries. This coincided with the political movement for India’s independence from the British colonial rule and the call for Swadeshi even in business – hundreds of Swadeshi firms were formed by Indian capitalists. At the same time, rich with handsome exploits from global trade, they began investments to develop large-scale industry.
India after independence is a mixed story of capitalism and government regulation of business. The free trade narrative changed in post-colonial India. “The government of independent India decided that trade was undesirable, and money lending was evil. The socialists among the Indian politicians wanted a Soviet-style industrialisation. Metals, machines, and chemicals were to be the favoured fields. The technology had to be bought from western markets,’’ says Tirthankar Roy in ‘Business
History of India: From enterprise to capitalism’, a book I highly recommend for those keen on getting to know the history of Indian business.
In the 75 years since India became free from British colonial rule, the Indian economy has witnessed several economic transitions. The most significant has been the Indian economy’s transition from a free trade regime to a socialist and protectionist regime in the 1950s and 1960s, followed by a wave of reforms in the 1990s which opened up the Indian economy.
As we turn 75 years old as an independent country, we have a long and rich history to take stock of, ponder over and think. After all, business history has a key role in developing and enhancing our understanding of how businesses evolved, in response to and in spite of the prevailing social and economic environments of the times in the country’s past.
Here are the key developments in history that shaped the post-colonial era of Indian business and economic development…. continue reading my piece here.