70 years of doing business: An evolving India Inc

India's business environment has seen many shifts since Independence

Entrepreneurs sail through changing tides

The story of 70 years of business, coinciding with independent India, is about two worlds distinctly different from each other. Business historians and economists prefer to label the first 45 years as an era of just managing the system. They see 1991, the year that opened the floodgates of economic reforms, as a starting point, making Indian businesses look rather young. And if Indian businesses versus multinationals was the norm earlier, now foreign investor-funded desi entrepreneurs are leading the way in many ways (the $2.6-billion fund infusion by SoftBank into Flipkart being the latest example). 

In the recently published India Transformed—25 Years of Economic Reforms, edited by Rakesh Mohan, economist Omkar Goswami writes that trying to remember the world of 1991 is like seeing “dim images of a quarter century ago that briefly appear in one’s memory, overlaid by myriad changes that have occurred since.” He goes on to explain with examples of hard-to-get telephone connections to eternal wait for cooking gas cylinders. In contrast, reforms since 1991 have created “a large and economically powerful corporate sector that in most parts takes its growth and investment decisions independent of the state.”  

The symbiotic relationship between business & politics

“When India came under the control of Britain, it was a case of a country without machines being overpowered by one which had them. To discard machines, go about half-naked, live half-starved and reside in rude huts, would never lift us to the heights of happiness and freedom, but rather plunge us into the depths of misery and degradation. I, therefore, resolved to concentrate on the sound management of our enterprise, build more and still better machines, create more jobs and leave politics to our politicians. I would serve my country and lift her out of poverty and bondage, in the manner, which to me, seemed wisest, best, most efficacious, and most efficient.”

Thus wrote S L Kirloskar, one of India’s most celebrated entrepreneurs, in his autobiography, Cactus and Roses, making no bones about his relationship, or the lack of it, with Mahatma Gandhi and the politics of the day. But, the fact is that the relationship between business and politics, however much they might deny it, has been symbiotic for businessmen and politicians.

Corporate India remains a family-owned enterprise

India has gone through many cycles of economic growth since its independence from British rule in 1947. But one thing has remained constant through the economy in the last seven decades: the dominance of family-owned businesses in India.

Most of the country’s largest companies across sectors continue to be family owned despite the rise of government-owned and institution-owned enterprises in the last 70 years.

Starting as an open market economy, India became a planned economy by the mid-1950s, where private enterprise was forced to play second fiddle to the newly established public sector. Things came full circle in 1991 when economic planning was dropped in favour of the market mechanism and the private sector was once again free to grow as it wished. This cycle has created a series of winners and losers, with a steady rise of new companies and decline of older, inefficient ones.