How Indian enterprise evolved: From bazaars to the Reliance empire

Lakshmi Subramanian's book provides a sweeping view of Indian business history, from pre-modern trade to corporate giants like Reliance, highlighting entrepreneurs and industrial evolution

India Before the Ambanis: A History of Indian Business, Money and Economy

Author: Lakshmi Subramanian

Publisher: Penguin Random House

Pages: xxvi +250

Price: Rs 699

  India has had a long tradition of recorded business — covering the bazaars, foreign trade, transformation of merchants to entrepreneurs, building of a fairly substantial modern industrial sector in the late colonial period, the role of entrepreneurial groups such as the Parsis, Gujaratis, Marwaris, Chettiars and Tamil Brahmins, creation of new business organisations and hierarchies, expansion into new industries after Independence, and mastering the licence-control raj to create major business groups such as Reliance.

 

There have been many separate works that focus on one or more aspects of this rich business history. Unfortunately, there was no individual book that covered the entire span; a book that was historically accurate yet readable that one could refer to someone who wanted an overall view of the subject.

 

Lakshmi Subramanian has changed that. Through six chapters, Dr Subramanian has created a clear and comprehensive book that I would recommend to anyone who wants a bird’s eye view of the subject. So, many kudos for that.

 

The first substantive chapter covers pre-modern business, especially ocean-bound and internal trade, commerce, and the use of money and hundis (bills of exchange) across this remarkably integrated trading world. Business historians know of the shipping magnate from Surat, Mulla Abdul Ghafur who cornered the trade in spices and textiles and dominated the markets of Mocha, Aden and Basra. But I was pleasantly surprised to read the account of Seth Shantidas Jhaveri (1580-1659) and his successes in minting, in dominating the bullion market, in advancing loans, and in the jewellery business as well as his political clout across Gujarat. As the might of the Mughal empire declined with Aurangzeb’s death in 1707, the power of merchants, moneylenders, and indigenous bankers across India grew. Notable figures included Jagat Seth of Murshidabad, Tarwady Arunji Nathji of Surat, Kashmiri Mal and Bachhraj in Awadh, and Gopaldas Manohardas and his successors in Benaras.

 

Early entrepreneurs are the subject of Dr Subramanian’s second chapter where she focuses on Jamsetjee Jeejeebhoy (1783-1859) and Dwarkanath Tagore (1794-1846). Jeejeebhoy, along with his partner, William Jardine, became the largest shipper and trader of Malwa opium from Bombay to Canton and thence across China; and subsequently, the greatest philanthropist of the time. If Jeejeebhoy was a great China trader and shipper, Dwarkanath was the original industrialist. A rich zamindar and polyglot, Dwarkanath first mastered the zamindari system to become a huge landowner; then bought a colliery at Raniganj and steam barges, and through his newly formed Carr, Tagore & Company, pioneered the managing agency system; made a fortune many times over by transporting coal downriver to Calcutta in an era where ocean steamboats were substituting sailing ships; got into various businesses that often failed including a pulley bridge over the Hooghly; established the Union Bank in 1829, which subsequently crashed thanks to excessive dependence on indigo exports; organised lavish soirees and died in England in 1846. The original, yet unfocused, industrialist.

 

By the mid-19th century, a corporate structure based on joint stock and managing agencies had come into play which allowed entrepreneurs to float several companies, each with thousands of shareholders. The cotton spinning and weaving originated in Bombay and spread to Ahmedabad and Nagpur; export of Malwa opium continued apace; and Parsi business families came to the fore: Dinshaw Petit, the Wadia family and, most of all, the Tatas, led by Jamshedji Nusserwanji (1839-1904), who after setting up several textile mills turned to the iron ore deposits in the Chanda district with the idea of setting up an iron and steel mill. Jamshedji’s son, Dorab Tata raised capital in India through a public issue and completed the project and also set up a hydroelectric power company. In addition to the Tatas, Ardeshir Godrej (1868-1936) and his successors began with lock-making and moved on to manufacture steel safes, office furniture, typewriters and soaps.

 

The next chapter is on money in the bazaar, especially on the role of various types of hundis.  This is followed by brief histories of three business houses: of T V Sundaram Iyengar (TVS) and its role in transport and the automotive sector; of Bajaj and two-wheelers; and of Kirloskar, for pumps and diesel engines.

 

Finally, Dr Subramanian moves to Dhirubhai Ambani, and how he and Reliance did business in the age of licences and controls. It is perhaps the best chapter of the book. While describing in detail, Subramanian pulls no punches on Dhirubhai’s skills in cornering licences and capacities, getting excise duties and import tariffs aligned to his favour, building a state-of-the-art polyester staple fibre and filament yarn mill at Naroda, sustaining and expanding the “Vimal” textile brand across India, building a huge and loyal shareholder base and expanding further at Patalganga, Hazira and Jamnagar.

 

To repeat, I would refer this book to a reader who wants an overall view of Indian enterprise from the early 19th century till economic liberalisation. However, I have a complaint. The copy editing is not up to par and there are too many typos to countenance. This is now true of many Indian publications. In an effort to curb costs, publishers have got rid of good copy editors; and we now get books that are bereft of typo-less good editing. That aside, it is a good book.   

The reviewer is an economist and chairman, CERG Advisory and author of  Goras and Desis: Managing Agencies: Managing Agencies and the Making of Corporate India