New Delhi: Large trading houses, conglomerates, Indian business families, banks, utilities, commodity companies, transnationals from the US, Switzerland, Britain—the Indian corporate landscape in 1947 looked very similar to the one we have today. But a vast sea of difference separates the two eras. In the 70 intervening years, India’s corporate world has grown in size, depth and spread. From 100-odd companies at the time of independence, there are now nearly 5,000 companies listed on the various stock exchanges in the country.
There is the reassuring presence of dozens of firms that bind the past with our present—Colgate launched its dental cream in India in 1937. We still use the same cream, albeit in the form of a gel. Asian Paints has been colouring Indian homes since 1945. India’s business families, too, provide a degree of continuity though many which were dominant in 1947 fell by the wayside, unable to cope with a rapidly changing business environment after the 1980s. But newer groups have joined the Tatas, Birlas and the Mahindras to ensure that even now, nearly 70% of business output in the country is generated by business families. Apart from Germany, no other large economy in the world replicates this feature.
Indeed, it was India’s traditional business class which provided the bulk of its private economic contribution over four decades of the licence-permit raj. Struggling and straining against the artificial controls imposed on their development and growth, Indian companies fought off the tag of being mere profiteers to keep the wheels of the economy turning. If the stringent controls on foreign exchange outflows prevented them from importing the latest technologies, the iron hand of the state also mandated how much they could produce. The former ensured Indians had to make do with technologically obsolete and inefficient products and services while the latter meant having to wait years for basic needs such as a telephone or a gas cylinder. It was rationing at its worst, particularly since the public distribution system that was put in place by the government engendered corruption and encouraged favours.
When 1991, with its breath of economic freedom dawned, there was a collective sigh of relief even if there were reservations from traditional business houses about being exposed to multinational capital and competition before they had a chance to consolidate their businesses. As it turned out, the big winners of liberalization were Indian companies, especially those that were born in the new era. In sectors such as pharmaceuticals, telecom, information technology services and banking, besides traditional areas like steel, it is Indian companies such as Sun Pharmaceutical Industries Ltd, Bharti Airtel Ltd, Tata Consultancy Services Ltd and ICICI Bank Ltd, in some cases with strategic help from foreign partners, that are the market leaders today.
Growth in every decade since 1991 has been driven by a new set of companies which have rushed to seize the opportunities presented by the opening up of a new sector, either by government fiat or simply through emerging consumer demand. In rapid succession, the companies of new India modernized their shop floors, streamlined processes, professionalized management structures and then ventured forth to reclaim a lost heritage. Till the 1700s, India’s share of world trade was nearly 24%, at par with what the US share is today. From those commanding heights it dropped precipitously following the ruinous British rule, and by the 1950s, as per British economist Angus Maddison, India’s share of the world income was down to 3%. Today, as per the International Monetary Fund (IMF), India’s share of world gross domestic product is around 6.1%. In the last 10 years, Indian companies have made multi-billion dollar acquisitions of global assets and while many of them haven’t quite worked out, partly because of an adverse commodity cycle, it is amazing how well they have absorbed the fallout of these M&As-gone-wrong. Experts say this is a part of their learning curve and in the decades to come we will see more such acquisitions as a resurgent business community looks to stamp its mark on the world.
If the timeline for the start of India’s corporate journey is reset to 1991, the evolution of its many companies has been nothing short of remarkable. But as a nation, we haven’t yet got over our suspicion of business. In the 63 years since the Bharat Ratna, the country’s highest civilian award, was instituted, it has been awarded only once to a businessman, to J.R.D Tata, in 1992. Indian corporate leaders need more appreciation and a little less opprobrium.