Paper: 09, Entrepreneurship Development & Project Management

Module: 04, Entrepreneurship and its evolution in India

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Co-Principal Investigator Prof YoginderVerma

Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Paper Coordinator Dr. Vishal Kumar

School of Management,
Maharaja Agrasen University, Baddi

Content Writer Dr. Vishal Kumar

School of Management,
Maharaja Agrasen University, Baddi

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 Items Description of Module

Subject Name Management

Paper Name Entrepreneurship Development & Project Management

Module Title Entrepreneurship and its evolution in India

Module Id Module no-4

Pre- Requisites Basic knowledge about Entrepreneurship Development in

India

Objectives To study the evolution of entrepreneurship in India

Keywords Entrepreneur, Entrepreneurship, evolution of

entrepreneurship, Entrepreneurial growth in India

QUADRANT-I
Module 3: Functions and Need of Entrepreneurs, distinction between Entrepreneur and a Manager
1. Learning Outcome
2. Introduction
3. Evolution of Entrepreneurship
4. Industrial Policy 1948
5. Sources of Entrepreneurship in India
6. Ten Entrepreneurs who changed the face of Corporate India
7. Summary

1. Learning Outcome
After completing this module students will be able to:
i. Understand the evolution of entrepreneurship in India.
ii. Industrial Policy 1948.
iii. Know the sources of entrepreneurship in India .
iv. Know about ten entrepreneurs who changed the face of corporate India.

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 Entrepreneurship and its evolution in India
2. Introduction: The Entrepreneurial growth in India is as old as Rigveda when metal handicrafts existed in the
society. But manufacturing entrepreneurship did not develop so much in India due to its weak transportation and
communication system. At that time the only means of transport was rivers so some kind of entrepreneurship
was seen among the Artisans in the cities which were established on the banks of rivers like Banaras, Gaya, Puri,
Allahabad etc. At that time Indian industry was basically small scale and cottage industry. But it could not
survive due to lack of transport facilities, the establishment of an alien rule with the influx of many foreign
influences, competition of more highly developed form of European industry.
Although entrepreneurial talent was in abundance in the Indian businessmen, but India did not offer much scope
for its development, that is why many traders migrated to various countries like Burma, Singapore and Kenya
for the purpose of growth and trading. In that regime, lack of political party, network of custom barriers, taxation
policies, existence of innumerable system of currency, low prestige of businessman, and lack of capital were the
main reasons responsible for failure of entrepreneurship.
3. Evolution of Entrepreneurship in India: In 17th century, Indian export trade of textile was on ascending
trend in spite of discouraging environment for the entrepreneurship. Method of trading in India is changed by
European investment. Grouping of the Indian traders into joint- stock associations for the purpose of managing
the supply of textiles to the European countries was very significant at that time. As a result Indian textile goods
were in great demand and the balance of trade was favorable. But the position of Entrepreneurs did not improve
as the British government revised its custom rules to discourage the demand of Indian textile goods, and Indian
entrepreneurs could not expand their business as they had to depend upon the merchant class for capital and they
retain the major share of profits. Up to 1850, the major commercial and economic development in India centered
on the growth of the British private enterprise in banking, insurance, steamships, plantations and coal mines.
Afterward, with a view to take advantage Britishers think to exploit the natural resources of India. So with this
objective they penetrate into the Indian Territory. The railway was introduced in India in 1853.
After 1850 manufacturing entrepreneurship came in to existence. In 1854, C.Davar established a cotton textile
manufacturing unit in Bombay. In four years, there were four textile mills in India and with in a period of 25
years, its number had increased to 58. Ranchodlal, a Nagar Brahmin in 1861, established a textile manufacturing
plant. Then in Surat, first ship building industry was established by East India Company. After that lot of
entrepreneurs entered in to new ventures like Jamshedpur steelworks. Jute mills, pharmaceutical industry were
also started. Then in Surat, The East India Company established its first ship building industry. In the end of 19th
century, there were 18 jute mills and 51 cotton mills.

In 1905, the ‗Swadeshi‘ movement emphasized on indigenenous goods formed an important facet of nationalism
and developing nationalism in the minds of Indians. Jameshedjee, Tata also named the first millhe built as
‗Swadeshi Mill‘. Major names of that era were Ghanshyam Das, Birla, Khatans, Goenka, Mafatlal, Jejeebhoy,
Gagalbhai, Kirloskar, Hirachand, Wadia, Godrej, L.K. Singhania, Gujarlal and Lala Shriram. The advertisement
of Krishna Mills in The Tribune of April13, made the following appeal: ―Our concern is financed by native
capital and is under native management throughout‖. Thus the Swadeshi movement inspired the Indians to
invest in industrial activities and under Indian management. The main goal of Swadeshi movement was to
encourage the Indian industries and to promote and protect their interest. In this movement Indian people
3

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 boycott foreign goods and it works. As a result British trade and industry hit badly and Indian manufacturing
Entrepreneurship especially cottage industry, handloom clothes, soap and textile gave a new life. Change makers
like JRD Tata, MS Oberai, jamnalal Bajaj lead the new way for Indian entrepreneurs and opened a new vista for
Indian .Entrepreneurs and entrepreneurship. Now Entrepreneurs focused on their Business expansion and
growth.

It is observed that lack of technical skills and insufficient capital resources made a hurdle in the growth of
Entrepreneurship. This problem was also discussed by the Planning Commission at that time of the First Five
Year Plan. In their words ― as a proportion of the total population the number of educated men and women in the
country is very small, and there ids dearth of trained personnel of the requisite quality in business and industry
as well as in public administration. Unemployment among the educated classes is to some extent a consequences
of the excessive bias in the present educational system towards literary education to the neglect of specialized
technical and vocational training. To some extent the difficulties experienced by educated young men in finding
employment are traceable to certain reluctance on their part to take on occupations which involve hard manual
work or work in somewhat uncongenial surroundings either in cities or in rural areas. The problem has many
facets. Unemployment among highly qualified and trained personnel may to some extent be frictional or
transitional in character but it may also be due to a lack of adjustment between demand and supply of such
specialized personnel‖. So reason for Indian unemployment was lack technical and vocational guidance and
faulty education system. British government neglected practical and vocational aspect of literary and academic
training.
Evolution of Entrepreneurship in India
• In 17th century method of trading in India was changed by
European investment

• After 1850 manufacturing entrepreneurship came into

existence.

• In 1905, the ‘Swadeshi’ movement emphasized on

indigenenous goods formed an important facet of
nationalism

• Technical skills and insufficient capital resources made a

hurdle in the growth of Entrepreneurship in Pre-
Independence

• In the post independence period there has been

considerable growth of Entrepreneurship

• Now People with diverse backgrounds have joined the

stream of Entrepreneurship.

So in pre- independence period, India did not have a well developed banking system. Managing agency system
was first recommended by Indian Dwarkanath Tagore, who encourage others to form joint-stock companies and
developed a distinct method of management in which management remained in hands of ‗firms‘ rather than
‗individuals‘. Some of the famous managing agents at that time were Andrew Yule and Co., Martin Burns, Bird
and Co., Duncan Brothers, etc.
4

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 In the post independence period there has been considerable growth of Entrepreneurship. In this period
Entrepreneurship has dispersed socially as well as geographically. This has been due to development of
industrial infrastructure, growth of public sector, import substitution, export promotion polices of the
government, foreign collaboration, expansion of technical and other education, increasing status of businessmen,
etc. technocrats now constitute a major source of entrepreneurship. It may be slow or creeping change in the
traditional structure of agriculture. Now Entrepreneur used modern methods of cultivation in order to growth of
crops. Now they wanted to produce commercial crops along with traditional crops. People with diverse
backgrounds (different caste, communities, and families) have joined the stream of Entrepreneurship. No doubt,
Entrepreneurship in India has widened after independence. But there is need to instill the spirit of enterprise in
every group and community and to take the mantle of leadership to everyone of the country so as to make India
a truly developed country. As Pt. Jawahar Lal Nehru states,‖ Industrialization produces steel, it produces power.
They are the base. Once you have got the base, it is easy to build. The strategy governing planning in India is to
industrialize and that means the basic industries being given the first place‖.

4. INDUSTRIAL POLICY 1948

After independence population increases but production was not increased as desired. Inflation also showed its
giggling teeth. So only measure to deal with inflationary tendencies, and to ensure economic development, it is
felt that industrial production should be increased. So in order to strengthen industrialization, Industrial policy
1948 was announced. The government took some important measures in this industrial resolution such as
distribution of economic power between public and private sector, spreading entrepreneurship from the existing
centers to others centers, etc‖. Government of India adopted several measures to develop basic infrastructure and
heavy industries. Industries (Development and Regulation) ACT 1951, Five year planning, industrial policy,
Incentives and subsidies, are important measures. To strengthen the industry, in 1948 IFCI was also set up.

Pt. Jawahar Lal Nehru gave due importance to the small scale industries. In the words of Nehru,‖ The test of a
country‘s advance in industrialization is heavy industry not the small industries that may be put up. That does
not mean that small industries should be ignored. They are highly important in themselves for production and
employment‖.

Entrepreneurial growth after independence has witnessed great economic, social, and political changes in India.
These changes led to remarkable changes in entrepreneurship. In this era several new communities not known
for mercantile background started entrepreneurial activities. In five year planning system there has been a
mushroom growth of entrepreneurship in the country. Private entrepreneurship established industries in diverse
fields, both capital and consumer goods industries. Since the adoption of first plan, indigenous organization for
design, construction and engineering of projects has been developed. India has successfully completed major
projects abroad in the face of international competition. Industrial houses have started research and development
in various fields on a considerable scale.

With the entry of young and highly educated people in industry, the face of entrepreneurship totally changed.
Government policies regarding import substitution, export promotion and foreign collaboration have led to rapid
entrepreneurial growth in India. A noteworthy feature of entrepreneurial growth under planning has been the
emergence of small entrepreneurs in different parts of the country. Technicians, rural artisans, engineers, etc
became entrepreneurs. Many institutions set up to provide all type assistance to small entrepreneurs. In fact
small industry has become a movement in India. It has created a healthy environment for the growth of
entrepreneurship.
5

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 In 1991, the government of India announced its policy toward the small scale sector. There has been a
remarkable spurt in entrepreneurship in India due to economic reforms. Sh. N.R.Narayans Murthy raised the
hopes of the middle class when entrepreneurship in this country was meant to be in heritage. Today, he is an
example of how people can build an empire from scratch with no ancestral business behind them.

Sunil Mittal, Anand Mohindra, Shahnaz Hussain, J.L.Oswal, Godrej, Tata, Birla, and many more are the names
which entirely change the face of Indian entrepreneurship. Some of the biggest companies today, Airtel, Future
group, jet Airways, and Zee television, did not exist two decades ago. Many like Wipro and Infosys went public
only after 1991. Today several Indian industries are global benchmark even in emerging sectors such as
Information technology, telecom and Outsourcing. Within 20 years India has produced more than 2 lakh
Millionaires and large number of billionaires.

5. Sources of Entrepreneurship in India

Before independence the supply of domestic entrepreneurship basically came from selected communities that
are Parsees, Gujaratis, and Manipur Parsees. They had merchant houses at Bombay and Surat for overseas trade
and for the European traders they acted as brokers by the middle of the 19th century they has emerged as a
dominant trading and financing communities of Bombay and Gujrat. They playes a important role in the
development of cotton textile and steel industries in India. In Ahmedabad Gujrati trading community played a
very major role in establishing textile industry. In the Northern part of country Hindu and Muslim traders played
a significant role in the growth of entrepreneurship. In eastern part of country especially Calcuta, Marwari
businessmen established industries. The Marwari community and other traditionally entrepreneurial
communities dominated the entrepreneurial scence before independence. In South India, Chhetties were the
main trading community. They acquired interest in banking by establishing contracts with reputed Indian
business houses. Syrian Christian called Nazarani, Mappilas, and Mohammedan merchants known as Moplahs
were important trader classes on the West coast in South. Khatris, Bhatias and Lohianas were important
enterprises in Punjab and Brahmins in Maharashtra.

In his book ―Enrepreneurship-Concept, Nature and Need‖ M.M.P.Akhouri states that Entrepreneurship is the
result of four dominant factors, the socio economic system, the support system, the resource system, and seld
sapphire system. these four systems are interrelated, interacting and constantly adjusted with each other. Planned
efforts to develop entrepreneurs, therefore, require integrated efforts covering all the four systems. An attempt to
effect change in one system neglecting others is bound to fail and the overall objective to develop
entrepreneurship will not achieve.

6. TEN ENTREPRENEURS WHO CHANGED THE FACE OF CORPORATE INDIA

1) Cowasjee Nanabhal Davar— The Inspiration To Invest

Davar inaugurated India‘s industrial revolution. In 1854, he set up India‘s first steam-powered textile
mill in Bombay. Capitalized at Rs. 5 lakh, the Bombay Spinning and Weaving Company paid a 10
percent dividend for six years straight. Davar set the stage for the safety of industrial capital in India.
Galvanized by his example, others too made industrial investments. Among them: the woods and the
tatas.
2) Sir Jamset Nusserwanji Tata—The Father of India’s Industrial Revolution

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 Tata was the first Indian to understand the significance of the industrial revolution. At his Swadeshi
textile mill, he instituted pension funds and accident compensation. He believed India‘s progress hanged
around steel hydroelectric power and technical education. He inspired creation of the Indian Institute of
Science—formerly --Tata Institute—in Bangalore. In 1900, when he was 60, he set up jamshedpur
Steelworks after learning steel-making in Europe.
3) V.O. Chidambaram Pillai—The Steamships That Cried Freedom
Pillai was a nationalist who entered business to prove a point as much as to make profits. His Swadeshi
Steam Navigation Company Ltd. broke the monopoly of British shipping in coastal trade with Ceylon.
VOC, as he was popularly called, was a radical Congressman who was arrested in March 1908 on
charge of section. He was, finally released on 1912. Pillai inspired an entire generation of conservative
southerners to plunge into business.
4) Rai Bhadur_Mohan Singh Oberoi—The Brown Sahib’s Opportunity
In1934 Oberoi mortgaged his wife‘s jewels while scratching together Rs. 20,000 to buy his British
partner‘s stake in the Clarke‘s Hotel, Shimla. He put in money while the Britishers pulled their out, and
a decade later, he was the first Indian to run a hotel chain. In 1965, he opened the first five-star
international hotel in India in Delhi. Thirty-four hotels in seven countries later, Oberois was the first real
Indian multinational.
5) Henning Hock Larsen—The Dane Who Never Went Home
One of a small flock of Europeans who refused to quit India. Larsen and his partner Soren K.Toubro—
both came here to setup a cement plant for a British employer—set up a company in 1938 that became
India‘s pre-eminent engineering giant. Larsen knew independent India offered much scope for his
company and his skills. Worth Rs. 5,400 crores today, Larsen‘s push to manufacture it at in India
sparked off an engineering boom that hasn‘t quit. From nuclear plants to new necessaries, Larsen‘s
stamp on India is indelible.
6) Dr. Verghese Kurien—Father Of the Unlikely Entrepreneur
Dr. Kurien created Operation Flood, the largest dairy development programs in the world. He made
India the world‘s largest milk producer. But most importantly, he put economic‗power in the hands of
the producers, all 10 million families at last count. The Kaira District Cooperative Milk Producers‘
Union, or Amul as India knows the giant, is modern and fleet enough to lord it over an array of
multinational competitors. Humble farmers, and cowherds—they all have a stake in one of the world‘s
best dairy operations.
7) Karsanbhai Khodidas Patel—The Power Of The Grassroots.
Patel knew no marketing, had no management qualifications and no collaborator, Indian or foreign,
when he created the first Indian brand to humble the best multinationals. The saga of this Gujarat
government chemist began with a 12-yard shed in his backyard in 1969. Worth Rs. 2,440 crore today,
Nirma‘s cut price detergent shook the likes of Lever, Patel, who speaks little English, inspired legions of
Davids to do entrepreneurial battle with India‘s corporate Goliaths.
8) Aditya Vikram -Y-Birla—The First Mogul of Globalization
When MIT graduate AdityaVikram Birla returned to India to be a part of his grandfather G.D.Birla‘s
sprawling empire in the 1960s, he could have gone with the flow. But when it took Indian bureaucrats
7

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India
 11 years to clear a refinery project, Birla did not believe it worth his while to work the license raj.
Instead, long before globalization became a buzz-word, he spread outward, setting up a textile mill in
Thailand, later the world‘s largest palm oil refinery in Malaysia. When he died in 1995 his group had 17
companies in 14 countries.
9) Dhirubhai Ambani— The Saga Of The New India.
Truly, an entrepreneur for the, tumultuous new India. Poor son of Gujarat village school teacher
reached Aden at age 17 and worked as petrol station attendant. Mixing grand opportunism with extreme
guile, he clambered his way up, manipulating the license raj to his advantage. He created an equity cult
by going to millions of small investors when the big bankers refused him money. He adapted as easily to
liberalization. At Rs. 60,000 crore, there‘s quite simply nothing larger than Reliance in India today.
10. N.R. Narayana Murthy—Messiah of the New Middle Class.
How many companies have 1,388 employees that are rupee millionaires and 72 that are dollar
millionaires, including drivers and peons? Murthy‘s miracle is not just that he and seven professionals
built a tech powerhouse from Rs. 10,000 as initial investment in 1981. He did it with middle class
values—hard work, humility, honesty and innovation—-and inspired uncountable thousands on the
good way to make money. And as the thousands clamoring to get into Infosys indicate, there is no better
employer around.

( Source: Adapted from Business Today, Jan 20, 2000 and The economist , Indian Entrepreneurs : 10 Greatest
Businessman From History )
7. Summary:

Entrepreneurship Development & Project Management

Management
Entrepreneurship and its evolution in India