1.18 Business Risk 1.1 HISTORY OF COMMERCE IN INDIA Commerce is a wide term which consists offal those-activfies, which are necessary fpr sale, transfer or exchange of goods and services. It provides the necessary link between producers and consumers to ensure proper distribution of goods. The economic and commercial evolution ofany economy depends upon its physical environment. In case of India, Himalayas are in the North, which is bordered by water in the South. * Silk Route: It was an ancient network of trade routes that connected the east and the west. A network of roads leading to Silk Route helped India in establishing commercial and political contacts with neighbouring foreign countries. The Silk Route got its name because of the heavy silk trading that was carried out along its length. © Spice Route: The maritime routes linked the east and the west by sea and were used for the trade of spices and known as ‘Spice Route’.and commerce have helped India to Play a laro were founded in the thi connections with Meso, ‘coloured gemstones, beads, pearls, sea shells, terracotta ‘arked by substantial commercial activities and urban develge: and military security during ancient times wu, ment 2nd trade regulations were carefully planned, ines Were diverse types of coins and weighing practices which used to vary from’ Place with the help of money changers and by resorting to certain common} e eights and measures. oa ird mites Potamia ang nited most of the 14.2 INDIGENOUS BANKING SYSTEM In the beginning of civilization, hi trade was carried out according to and services with each other to si wheat for a cloth from a Weaver, uman needs were simple and limited. the barter exchange, in which people used to exchange goods atisfy their wants. For example, when a farmer exchanges | it is known as barter exchange. The primitive world’s introduction of metallic money and i * Indigenous Banking System played a prominent role in lending money and financing domestic and foreign trade witly ‘currency and letter of credit, . * With the development of banking, people began to deposit precious metals with lending individuals (functioning as bankers or Seths) and money became an instrument for supplying the manufacturers with a means of producing more goods. * Documents such as ‘Hundi’ and ‘Chitti’ were in use for carrying out transactions in which money passed from hand to hand: Hundi as an instrument of exchange was prominent in the subcontinent. : Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. So, Hundis involved a contract which: (i) warrant i payment of money, the promise or order which is unconditional; (ii) capable of change throug! transfer by valid negotiation.Indian Merchant Communities opular forms of hund : hundi payable at sight is called Darshani hundi. It is negotiab! Darshani Hundi: A d for payment within a reasonable time of it like a demand bill. It should be presente: - geceipt by the holder. 2. Muddati or Miadi Hundi: It is one which is payable after a specified period of time liki ae time bill’ Banks usually provide loans against the security of such hundis. ae le only to a Shah (a respectable person of. “3, Shahjog Hundi: This is a hundi made payab) Sha rth and substance in the market). It may be muddati or darshant and ean be tina erred freely from one person to another by mere delivery. However, it is not payable to bearer. . . . 4. Namjog Hundis It is a hundi payable to the party named in the hundi or his order. 5. Dhanijog Hundit It isa hundi which is made payable to the owner or a holder or bearer- 6. sae Hundi: The term ‘Jokhmi’ has been derived from the Hindi word ‘jokhim’ meaning, ‘isk’. Such a hundi is usually drawn against goods shipped on a vessel and implies a certain risk involved in the shipment of goods. Jokhmi hundi is payable only when the goods arrive in safe and sound condition: If the goods are lost in transit, the consignor B nnot claim payment of the hundi from the consignee. 7, Jawabee Hundi: A hundi, which is in the form of letter or recommendation to a banker for payment of a certain sum of money to a specified person, is termed as jawabi hundi. 8. Zikei Hundi: This is a hundi accepted for honour in writing on @ Zikri chit (letter of protection) without being protested. It is drawn in the name ofa specified person residing phe town or city where the hundi is payable. If acceptance is refused by the drawee or ‘hen a refusal is likely to occur, the hundi is furnished to the holder by some prior party toit. 6, Firmanjog Hundi: This hundi is made payable to the order of payee. Itis just opposite of dhanijog hundi which is payable to the bearer only. Economic Activities by Ancient People Agriculture and domestication of animals were important components of the economic life of ancient people. * Due to the favourable climatic conditions, they were able to raise two or three crops ina year. Moreover, by resorting to weaving cotton, dyeing fabrics, making clay pots, utensils, and handicrafts, cottage industries, manufacturing, transports (i.e., carts, boats and ships), etc,, they were able to generate surpluses and savings for further investment. * Workshops (Karkhana) were prominent where skilled artisans worked and converted raw materials into finished goods, which were high in demand. * Family-based apprenticeship system was in practice and duly followed in acquiring trade- sie skills. The artisans, craftsmen and skilled labourers of different kinds learnt and leveloped skills and knowledge, which were passed on from one generation to another.materials IN{O TMISHEU YoUUD. Lay VasLE apprenuLcomp syoteut yas prac their art and skill could be transferred to next generations. 1.2 Rise of Intermediaries Intermediaries played a very important role in promotion of trade. It includes: yr wholesale and retail trade: They helped (i) Commission Agents, brokers, distributors foi in expanding trade and brought in huge amount of silver bullion into Asia and large share was in India. (ii) ‘The institutions of Jagat Seths also played an important role during Mughal period and days of east India company. Bankers began to act as Executors and trustees. ‘They charged high rate of interest on foreign trade. (ii) The emergence of credit transactions and availability of loans enhanced commercial activities. 1re export exceeded the import. India enjoyed a favourable balance of trade whe! the manufacturers, traders and merchants with (jv) Indigenous banking system benefitted additional capital funds for expansion and growth. 4) Later on, Commercial and Industrial banks also provided both short-term and long-term loans to traders. 1. Transport :sree tray semmerce and agricultural banks lo provide both short-and long-term loans to ane; 1.4 TRANSPORT Transport or Transportation refers to the physical movement of goods from the place of. Production the place of consumption. Transportation helps in the movement of goods and Passengers from one place to another with the help of various modes of transportation In the ancient times, transport by land and water was popular. As a result, trade was carried out by both land and sea. . 1. Roads: Roads had assumed key importance in the entire process of growth, particularly in case of inland trade and trade over land. The northern roadway route is believed to have stretched originally from Bengal to Taxila, There were also trade routes in the south spreading east and west. Trade routes were structurally wide and suitable for speed and safety. Maritime Trade: Itis the kind of trade which involves the transport of goods through the sea, using ships. It was another important branch of global trade network. Muziris (an ancient seaport and urban center on the Malabar Coast) has a long history of international maritime trade going back to the era of the Roman Empire. * During the Roman Empire, ‘Pepper’ was particularly valued and was knowns Black Gold’. For centuries, it remained the reason for rivalry and conflict between various empires and trade powers to dominate the route for this trade. * It was in the search for an alternate route to India for spices, which led to the discovery of America by Columbus in the closing years of 15' century and also brought Vasco da Gama to the shores of Malabar in 1498. NChapter 1 © Evolution and Fundamentals of Business * Calicut was a busy emporium and was even visited by Chinese ships to acquire items, like frankincense (essential oil) and myrrh (fragrant resin used in perfumes, medicines) from the Middle East, as well as, pepper, diamonds, pearls and cotton from India * On the Coromandel Coast, Pulicat was a major port in the 17" century. Textiles were the principal export from Pulicat to Southeast Asiaoe Part: A. Foundations of Business a xxtile was. the major Or 0 Pane Coast, Pulicat was a major port. Te Pulicat to South East Asia. 1.4 Trading Communities In different parts of countries, different communities dominated trade: (1) In Northern Region, Punjabi and Multani merchants handled business: (2) In Western India, Mahajans were managing trade. CChettiars were important traders: rn hats managed the trade | represented their Chief called Nagar Seth. fakim and Vaid ( jans), Wakil (Lawyer), Calligrapbers> (3) From South, (4) In states of Gujarat, Rajasth (6) In urban centres, Mahajan Communities Other groups active in urban areas were: Hi Pundit or Mullas Painters, ‘Musicians, ations terests of traders, some CO! membership, (Teachers), re formed, they formed their 4.4.1 Merchant Corpor: ucts, which even kings were (a) To protect the in rporations we own rules and regulations of code of cond supposed to accept and respect (2) Traders had to pay Octroi duties on imported goods, Trade and Industry taxes were also a major source of Revenue. (3) Customs duty varied according to the com (4) The ferry tax was another source of income goods, cattle and carts. ‘Tariffs varied from province to province. munities, it had to be paid for passengers, generation, (5) Local bodies used to receive tax. (6) 7 guild (head of Mahajans) used to de the market toll on behalf of all the merchants. (7) The guil ak a also acted as custodian of religious interest. ing temples and made donations by levying taxes on their meml (8) Due foie ae ymmercial activities big merchants gain power in society. al directly with kings or tax collectors and settle ‘They undertook the bers. 4 1.2 Major Trade Centres The followit wing we ap 1g were the leading trade centres in ancient India utra: Know: j rae m as Patna today. It was not only a com “ ] 7 for export of stones. . mercial town, but also a major Peshawa: q ° vv: It was an ii paeeee important export centre for ‘ ym: . rr wool and metcial transactions between India, China and Ri for import of horse. It had » a ome. 14. live qui sil At(3) a) it 6 (7) ic) (9) (10) ay (12) (13) “Taxilas It was a major centre of land route between India and Central Asia. It was also city of financial and commercial banks. It was a place of Buddhist centre of learning, famous Taxila university flourished here. Indraprastha: It was a commercial junction on Royal Road, Where most routes leading to east, west, south and north converged. Mathura: It was an emporium of trade. Many routes from South India touched Mathura and Bharuch, Varanasi: It grew as major centre of textile industry and became famous for beautiful gold silk cloth and sandalwood workmanship. It had link with Taxila and Bharuch. Mithila: Mithila established trading colonies in South China especially in Yunnan. Ujjain: Agate, carnelian, muslin and mallow cloth were exported from Ujjain to different centres. Surat: Textile of Surat were famous for their gold border (zari). Surat’s hundis were honoured in far off markets of Egypt and Iran, Kanchi: Here Chinese used to come in foreign ships to purchase pearls, glass and raw stones and in return they sold gold and silk. Madura: It was the capital of Pandayas. It attracted foreign merchants particularly Romans for carrying out overseas trade. Kaveripatta: Also known as Kaveripatnam, it was scientific in its construction as city provided loading, unloading and strong facilities of merchandise. It was a centre of trade for perfumes, cosmetic, scents, silk, wool, cotton, corals, pearls, gold and precious stones. ‘Tamralipti: It was one of the greatest ports connected both by sea and land with west and far east. It was linked by road to Banaras and Taxila. 1.4.3 Major Exports and Imports Major Exports included: Species, wheat, sugar, indigo, opium, sesame oil, cotton, parrots, live animals and animal products like hides, spins, furs, horns, tortoise shells, pearls, sapphire, quartz, crystals, Lapis, Lazuli granites, turquoise and copper, etc. Major Imports included: Horses, animal products, chinese silk, flax linen, wine, gold, silver, tin, copper, lead, rubies, coral, glass, amber, ete. 1.5 Position of Indian Sub-continent in World Economy (1 AD UPTO 1991) a) Between Ist and 7th Centuries: India was largest economy of the ancient and Medieval World. Controlling about one third and one forth of the world’s wealth. The country was referred as Swaranbhumi and Swaran deep in writings of many travellers.Pa gs. Heywas ve | a} of Past India company causing lack of freedom. ence of agricultural and scientifi i¢ revolution, to the masses. Inich was prosperous but with people who were poor. india in the mid 18th century. The East India} 1g raw materials, spicéy made India a country wl is ritish Empire began to take roots in I aad revenues generated by our provinces for purchasin and goods. This led to stop of inflow of foreign exchange. (5) ‘This changed the condition of Indian economy from being an exporter of process ‘goods to the exporters of raw materials and buyers of manufactured goods. 1.5.1 india begins to Reindustrialise tee a iene the process of rebuilding of e 1. roe year plan was implemented in 1952, pros ees of modern technological and scientific institutions, space and nucle; os ca Mise eles Indian economy could not develop at rapid pace, due to lack ee ea population, huge expenditure on defence and inadequal encour Them sector conomy started. When India starte due importance was given 3. Asa result, I ut, India relied heavily on borrowi om f¢ 01 0 ily on borrowings from foreis a gs ‘ign sources and finally agreed to 4. The Indi: 7 5 Rang zien economy is one of the fastest growing economies in the world. inco1 i i . are ia savings, investment opportunities, increased domestic consumptic eoran ger population ensure growth for decades to come. ma - the high growth sect identi ees jors have been identified, which are likely to grow at rapid pacq 7. The rece: iti nt i re salir of government such as ‘Make in India, ‘Skill India’, ‘Digital Indid of Foreign Trade Policy (FTP 20 ‘ oe y 15-20) are expected to h ia 's of exports and imports and trade balance. . _—,