HVK Archives: Corporate India - The second coming of Swadeshi
Corporate India - The second coming of Swadeshi - The Times of India
Tara Sinha
()
1 September 1997
Title: Corporate India - The second coming of Swadeshi
Author: Tara Sinha
Publication: The Times of India
Date: September 1, 1997
In 1947, Indian business was a small group led by men of substance, who
carried with pride their swadeshi credentials: Birla, Tata, Mafatlal,
Mahindra, Shriram, Godrej, Dabur... These pioneers were driven by the
belief that their endeavours contributed to Indian nationhood. Many
cherished a commitment to their country and their fellow citizens. Several
were players in what is now fashionably known as core sector industries:
steel, textiles, et al. They recognised their societal obligations by
giving and caring through active welfare programmes. However, most
commercial undertakings, other than the retail trade, were owned and
managed by foreigners, mainly British. A unique segment was managing
agencies, such as Balmer Lawrie, Andrew Yule, Bird & Co. They traded in an
extraordinary variety of goods and services ranging from stationery items
to insurance. Other blue chip players were the forerunners of today's MNCs
Imperial Tobacco, ICI, Burmah Shell, Standard Oil, Caltex and the many tea
companies owning and running gardens with exotic names.
Changed Scenario
After independence, the scenario changed. Indians, mainly Banias or
'financiers' for British managing agencies, bought out their principals.
This trend was particularly apparent in the East - Calcutta, to be precise.
Indians also set up new ventures and expanded existing activities. This
was the 'emergent swadeshi' phase.
The first heady rush of Indians entering industry and trade was brought to
a shuddering slow-down with the adoption of a rabid set of socialist
policies. Big Brother entered our lives, including business and commerce
pervasively. This phase was aptly labelled as the licence-permit Raj.
Survival was no longer necessarily of the fittest but certainly of the
wiliest. In their own inimitable manner, Indian entrepreneurs mastered a
set of new 'management techniques' to establish and grow their businesses,
in what was certainly a challenging environment. Taxes were many and
cumulatively imposed a crippling burden on honest taxpayers. Avoidance and
evasion were the new games. Regulations set out what could be produced and
how much. Severe punishments were dispensed if improved productivity
increased output. These foolish acts not only shackled us, but, distorted
our inherited values of honesty and fair play, replacing them with a
culture of 'anything goes' and 'everything is for sale'.
Despite barriers, new generation business grew and flourished in the
seventies and eighties. Reliance, Videocon, BPL, TVS, Oberoi, Cipla,
Ranbaxy, MRF, Goenka, led a pack of thrusting Indian enterprises. Looking
back their achievements were truly extraordinary. Coping with constraints,
such as almost insurmountable difficulties in accessing new technologies
for which funds were legitimately allowed, or controls on expanding
production to secure economies of scale, these intrepid Indians succeeded
in establishing businesses with solid foundations. Meanwhile, other, often
older, companies failed to survive in this grace-and-favour regime. Grand
old institutions either faded away or were declared sick and taken over by
an ever-willing government.
Glow of Hope
In their infinite wisdom, political leaders took charge of the commanding
heights of our economy. Coal, banking and insurance were nationalised ,
and, over time, run down. Not content dealing with the manifold tasks of
governance, the political and bureaucratic establishment entered business
and trade. Grandiose corporations ran hotels, baked bread, discovered,
distilled and distributed petroleum products, generated and delivered
power, managed international trade and conducted many other sundry
ventures. Predictably, few succeeded. Equally predictably, many were
allowed to 'survive' with hordes of workers being paid by ,cash-less'
organisations using taxpayer or borrowed moneys.
Suddenly, a faint glow of hope appeared. Men in high places discovered the
mantra of liberalisation. The nineties saw the beginning of a new age of
freedom. Big brother had grown up to acknowledge (nudged along by the IMF
and World Bank) that business was not the business of government.
Realisation was also dawning that people - not governments - made the best
decisions for themselves. Finally, the licence-permit Raj began to crumble.
During the early nineties, this glow strengthened and grew wider and
brighter as government not only proposed relaxation and removal of controls
on commercial activities, but, also acted to make it happen. Indians,
energetically committed to building new ventures or growing existing
enterprises, suddenly appeared all over the country. New corporate
families were founded Mittal, Paul, Ruia, Mariwala, Munjal - to name a few.
New Indian brands - Amul, Wipro, Eicher, Liberty and Phoenix, Maruti,
Lakme, Kwality, Titan, LML and Nirma - gained top-of-mind awareness. Entry
into sunrise segments started - Mahindra Kotak, Infosys, HCL/NIIT.
Everything was well set for India's 'New Swadeshi' initiative (remember,
New Labour in the UK).
Two little clouds appeared on this promising horizon. The first was the
seemingly selective opening of the so called non- essential sector to 100
per cent foreign ownership. Expectedly, old timers - Levers, Nestles,
Beechams - staked their claim for a 100 per cent presence. New corners who
had entered with smaller equity stakes, asked for additional shares. The
scenario became muddled and murky, and joint venture partners and Indian
shareholders wondered what tomorrow would be like. Down the road joint
ventures may turn out to be a transitional phase unless all the partners
have the resources to contribute equally. The second was the spurt of
acquisitions of well-established Indian brands and/or companies by foreign
players. Thums Up, Limca and GoldSpot, Kwality, Kissan and Tomco in the
high visibility consumer goods sector are symptomatic of take-overs in
other categories. A group of Indian entrepreneurs concerned about their
future banded together and were derisively labelled as the 'Bombay Club'
petitioners seeking protection from global competition. Today, the issues
they raise are being taken seriously. Would corporate India be able to
survive the onslaught of MNCs and others with aggressive intentions backed
up with deep pockets and long experience of competitive pressures? Do they
need lead time to evolve new competitive market skills to replace existing
ones developed to cope with the repressive conditions of a licence-permit
Raj? Would India end up being a marketplace for others' brands or would
new swadeshi enterprises emerge to conquer not just Indian markets but also
the world?
Native Ability
As yet no clear answers have emerged. Ultimately New Swadeshi will survive
and flourish. Why? Because of our native ability to excel in today's
sunrise industries as well in yesterday's business ventures. There is an
underlying determination among Indians, of all communities, to succeed and
make money. New .Swadeshi groups are all set to go multinational. The
mantra of globalisation is being internalised.
Look out India and look out world, New Swadeshi is here, getting set to
conquer markets with sheer intelligence and enterprise!
(The author is CEO of Tara Sinha Associates)
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