India@70: Entrepreneurs sail through changing tides

Analysts see 1991, the year that started economic reforms, as a starting point, making Indian biz look young

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.”  

Elaborating on the transition of industry, Gurcharan Das, author and former chief executive officer of Procter & Gamble, tells Business Standard it “was sort of a dark age for businesses before 1991…” India has changed profoundly over the last quarter, but reforms have not been marketed as well as they should have been. Das names telecom, information technology, pharmaceuticals and automobiles as the best success stories of the times. However, he also tells businesses not to ignore  the emergence of a new voice of the civil society. 

In a conversation with this newspaper, Goswami, chairperson of Corporate and Economic Research Group Advisory, says, “There can be just no comparison of the business landscape from what prevailed in the middle of the 20th century and now. Where would one find a business like, say, Lupin or Sun Pharma?’’ There are some segments, typically the largest enterprises, which still depend on the government. But just below that rung, there has been a massive change in the business environment — it has matured and hugely diversified, he adds.

However, there’s talk of a rethink of the reform programme already. Business historian Gita Piramal points at a “strong outflow of business talent from India”. “My dipstick estimates suggest that most of these are with professional qualifications and these are in significant numbers. They are also the next generation from business families. So my concern is that they are also the younger lot; consequently, the impact on India is far more intense and these are in response to the business climate.” This merits a rethink of India’s reforms programme, according to Piramal. 

Mahatma Gandhi talks to Ramakrishna Bajaj and others at Khadi Pratishthan, Sodepur, Kolkata, in 1946. Photo: Jagdish Agarwal/Dinodia Photo

Analysts agree that every phase brings a new set of challenges. From the days of the Rahul Bajaj-led Bombay Club opposing liberalisation to the call for animal spirit among corporates in recent times, change has been the biggest constant.

According to Shobana Kamineni, president of business chamber CII, Indian industry has proved itself to be resilient and adaptable. “It is not just the domestic policy environment that has been changing over the last 70 years, but also the global environment and technology advances.” Companies are constantly aligning with new modalities, strategising to leverage the opportunities and minimise the risks. She adds that of late, businesses have been encouraged by the proactive and accelerated reforms agenda which promises to set a strong foundation for the future and make India one of the most vibrant economies.

Not everyone is that optimistic. Veteran BJP leader and former finance minister Yashwant Sinha argues, “Indian business rarely complains. They have their demands but rarely do they bring those up in the form of complaints. It is true now, it was true earlier too.” However, Sinha gives them credit for being able to adjust even as they seek help from the government. “This learning is a result of opening up of the Indian economy.”

Sinha recalls how in April 1, 2001, as India opened its borders on several fronts, there were delegations of scared businessmen who came to him, then finance minister, for help. “The two-wheeler industry, for instance, was sure that there would be an avalanche of imports, but it turned out to be a false scare.” 

On whether businesses have matured, Sinha says, “They have learnt that governments will not support them if any one goes down, but they can count on support if an industry is on the verge of crisis and there, too, the support would come through state-owned enterprises. In my term, we bailed out Steel Authority of India Limited.”

Describing a road map for businesses from this point, Ashok Chawla, former finance secretary and now chairman of the National Stock Exchange, says the change will be exponential in 10 to 15 years. Consolidation with technology will cause massive disruption, according to Chawla. “In the next 15 years, we can expect many more changes than the last 70 years.”

The game has just begun and it will be a ruthless road, industry observers say. 

But, predictions don’t come easy. In the introduction to her book, Business Legends, Piramal quotes industrialist Rama Prasad Goenka from a panel discussion of 1996. “Even to look 10 years ahead, we need a person with a dream and a vision. In the last three decades, India has had three dreamers in the corporate world: J R D Tata, G D Birla and Dhirubhai Ambani….in my eyes, there have been no other dreamers.”