Indian business held out great promise at the time of Independence

Seth Walchand Hirachand Doshi's Walchand group of companies, with interests in shipping, aeronautics and automobile manufacturing, was one of the 10 largest business houses in the country at the time of Independence. (Illustration by Suneesh K.)

A functional stock market, well-developed banking system, a globally-oriented business community and a transportation complex comprising an extensive railway network as well robust ports in Bombay and Calcutta, India at the cusp of Independence had all the ingredients for an economic takeoff. Indeed, if you had looked out of the window during a cross-country drive on August 14, 1947, Indian business would have looked full of promise.

Despite the best efforts of the colonial rulers, the entrepreneurial spirit combined with a pioneering zeal had been kept alive by merchants like Jamsetjee Jeejeebhoy and Premchand Roychand who had through the 19th century created large empires of cotton and opium. There was the rich legacy of Jamsetji Nusserwanji Tata who founded the Tata Group in 1868 and was imbued with a nationalistic spirit that matched in degree and scale the contributions of America’s great builders like Andrew Carnegie and Henry Ford. A visionary builder who set up modern iron and steel as well as hydroelectric power companies along with the Indian Institute of Science, he was also a great philanthropist who was ranked first in the "Hurun Philanthropists of the Century" (2021) listing.

While the contributions of other latter-day business leaders like G.D. Birla, Jamnalal Bajaj and Kasturbhai Lalbhai, are well known, there were other less-celebrated men like Walchand Hirachand who in 1919 laid the foundations of The Scindia Steam Navigation Company, a pioneer in Indian-owned shipping. There were others like Shyam Lal Gupta who in 1939 started the publishing house S Chand, to publish text books by Indian authors at prices which made them far more affordable than the foreign books in the market.

Despite being left out entirely from the benefits of the industrial revolution that catapulted most of Western Europe to its present day success, there were men and women in India who were laying down the rules for a modern industrial system even at that time. In 1878, for instance, Sorabji Shapoorji Bengali put together a draft Factory Bill which was passed in 1881. In 1918 the Madras Textile Workers Union was established with the great labour activist Bahman Pestonji Wadia as its first president and two years later the All India Trade Union Congress, the first trade union federation in the country, was set up.

By then, Indians had also demonstrated the ability to develop from scratch as evident from the story of Bombay. Given as part of dowry to Charles II in marriage with Catherine of Braganza in 1661, it was a wasteland for the next 100 years. In 1761 it was described as “a dreary settlement resembling the backwaters that flowed into it.” And yet in less than 100 years Bombay was a flourishing port city, a major centre of business and economic activity, thanks to traders and merchants who recognized its potential.

By 1947, the foundations of three important industries, jute, cotton textile and iron and steel, had been laid. India’s 3,000-year-old dominance of the world’s cotton business had been steadily destroyed by the British policy under which India went from being an exporter of processed goods for which it received payment in bullion, to being an exporter of raw materials and a buyer of manufactured goods. Yet, with its Dhaka muslin, Masulipatnam chintzes and the calicos from Calicut, the reputation of Indian textiles endured and survived the colonial rule even though it was greatly emasculated by it. In 1947, India was producing 2.3 million bales of short and medium staple cotton from 4.4 million hectares, making it the second largest producer in the world after the US. Unfortunately, the sector was hit badly by partition. While India inherited 380 of the 390 mills from the pre-partition era, it lost 40 percent of the cotton-growing areas to Pakistan creating a serious raw material mismatch which had to be addressed through imports.

The Bombay Stock Exchange, Asia’s first, had been established in 1875 by cotton trader Premchand Roychand, who set up the Native Share and Stock Brokers Association under a banyan tree near Mumbai Town Hall where traders gathered daily to place bids and receive company stocks. In 1914 – 15 there were 2,545 joint stock companies in India with the total paid up capital of Rs 81 crore. By 1944-45 the number of companies had risen to 14,859 and the total paid up capital to Rs 389 crore. According to the 1948 PJ Thomas Committee Report on the regulation of the stock market in India "in many cities street markets and many outside brokers sprang up to participate in the rapidly expanding trade in securities."

There were lacunae, no doubt, including the absence of a capital goods sector, critical to the manufacture of every kind of product and the lack of sufficient capital to fund enterprises.

Yet, a bit more trust in its business community, some more freedom for young Indians to unleash their entrepreneurial spirits along with support from the government and India might have taken off much earlier instead of losing four decades to economic paralysis.