Specialisation among nations was a good thing, and though, the Indian "educated class" seem to desire, with patriotic fervour, industrialisation of their country, such industrialisation was neither desirable, nor likely.
John Maynard Keynes in The Economic Journal.
Which is why the British, for much of their rule from 1860 to 1947 did little to pursue development in India. In 1860, the financial policy of the new Government of India that replaced the East India Company was laid down by James Wilson, founder of The Economist. The tariff policy encouraged the import of finished industrial goods and the export of raw materials.
More From This Section
Little wonder, then, that the story of corporate India is mostly one of indigenous enterprise.
By the turn of the century, with England emerging as a major industrial power, Indian traders and moneylenders were assigned the role of intermediaries _ petty traders who were procurers and purchase agents in internal trade.
But the early big names were in textiles _ Bombay Dyeing, Hindoostan Spinning, Morarjee Goculdas Mills and the Birla's Century Textiles. This despite a hostile tariff policy and excise duty on each yard of cloth produced.
To mark the trends over the century, the Business Standard Research Bureau shortlisted 1,000 companies ranked on net sales and then relisted them on the basis of their date of incorporation.
The 1900s: When Jamsetjee Nusserwanji Tata informed Lord George Hamilton, secretary of state for India, about his intentions to set up a manufacturing unit _ Tata Iron and Steel (Tisco) _ the retort was cynical. He was told that Hamilton was prepared to eat every ounce of steel that Tata could produce. And despite the London money market rejecting Tata's efforts to raise 1.6 million pounds, 8,000 Indians chipped in to help set up India's first indigenous steel plant in August 1907. But with the key user, the railways, importing the metal, there was almost no demand.
This was also a decade when the banking sector took off. Bank of India, Corporation Bank and Bank of Baroda were the first. With tobacco selling cheaply in India, a major multinational sailed to India _ the British American Tobacco Company . The first cigarette plant was set up in 1908.
1911-1920: In 1914, with the onset of World War I, the free flow of imports had petered out. India was a good source of raw material but had no manufacturing capability. By 1919, after the war ended, the demand for indigenously manufactured goods was at an all-time high. The Report of the Indian Industrial Commission demanded the government's participation in the industrial development of India. This was the beginning of the business groups like Mafatlal and Kirloskar. Buoyed by the demand for Tisco steel in this phase, the Tatas flagged off Tata Power and Andhra Valley Power, which were to later come under the Tata Electric umbrella.
1921-30: Tariffs became the main source of income for the government of India during and after the war. The tariff on imports of sugar, cotton, paper, silk and cement was almost 25 per cent. Engineering companies like Gammon, Greaves and Balmer Lawrie also made their appearance.
1931-40: Buoyed by local demand, two of the earliest multinationals that came to India were the Bata Shoe Company and Unilever. Stung by the stiff tariffs on commodities, it was also a time for traders like the Dalmias and Singhanias to diversify into sugar and cement. The Birlas expanded while the Bajaj and Lalbhai groups made their appearance.
1941-50: With the Second World War (1939-45) and with India inching towards independence, the links between the business community and nationalist leadership grew stronger. Apart from donations, they supported the national cause by promoting indigenous enterprise. "The World War was a lucrative phase for business. Older groups diversified while new ones came in," says Tirthankar Roy, associate professor at the Indira Gandhi Institute of Development Research. While the Birlas diversified into cement with Grasim, new companies included Wipro and Asian Paints.
The wars also created a demand for automobiles and medicines. Capitalising on the potential, the automobile sector drove at full speed. Companies li