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Published online by Cambridge University Press: 22 April 2010
Among Third World countries, India stands out as having one of the most developed ‘big business sectors’, with a recent tendency by some firms to go multinational. This notwithstanding the fact that the public sector plays a major role in the Indian economy. Although the origins of some of India's business groups go back to pre-colonial times, most of them trace their beginnings to the 1850–1950 period, the ‘second colonial century’, during which India underwent a limited process of industrial growth as well as became a major exporter of some agricultural commodities to the world market (tea, jute, cotton, oilseeds, and, prior to 1910, opium and indigo). There are obvious parallels there with the developments in some Latin American countries, particularly Brazil, Argentina, Chile, Mexico and Colombia, which also emerged as major suppliers of raw materials (coffee, sugar, wheat, nonferrous metals) while they built up manufacturing sectors of various magnitudes (with Brazil in the lead). However, the private business sector in these countries presents a picture which differs in many ways from the Indian case. It seems worth attempting a comparison between those two very different underdeveloped regions of the world, the Indian subcontinent and Latin America, in the hope of being able to put the Indian case in a broader perspective. Given the broad similarity in the constraints under which capitalist enterprise laboured in those two areas, a study of the differences in entrepreneurial responses might bring to light certain specificities in Indian entrepreneurial history which often go unnoticed.
1 See Lall, S., ‘Multinationals from India’, in Lall, S. ed., The New Multinationals, The Spread of Third World Enterprises, (Chichester 1983) 21–87Google Scholar.
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4 This happened in 1895. For a detailed account, see Harnetty, P., Imperialism and Free Trade: Lancashire and India in the Mid-Nineteenth Century (Vancouver 1972)Google Scholar.
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20 Although there existed since 1875 large iron works which used modern methods to produce pig iron (but not steel).
21 The Indian mills were particularly successful on the markets of countries like the USA, Canada, Australia and Argentina where jute demand was growing apace with the expansion of wheat cultivation.
22 A mill was actually started before 1820 near Calcutta, but it was not very successful and historians generally consider 1854 as the starting date of this industry.
23 Exports to China started in 1873 and in the 1880s the Bombay mills sold 80% of their yarn on the Chinese market. Morris, M.D., ‘The growth of large-scale industry in 1947’, in The Cambridge Economic History of India, vol. II (Cambridge 1983) 577Google Scholar.
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25 A few mills were set up in the 1830s. Stein, The Brazilian Cotton Manufacture.
26 Versiani, ‘Industrial Investment’.
27 Between 1902 and 1913, Indian yarn exports to China fell from 121 million pounds (in weight) to 87 million while Japanese sales rose from 68 to 169 million. From a 1916 report of the U.S. Department of Commerce quoted in Koh, S.K., Stages of Industrial Development in Asia. A Comparative History of the Cotton Industry in Japan, India, China and Korea (Philadelphia 1966) 422CrossRefGoogle Scholar.
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32 In India mostly in the China trade, in Brazil in the cloth trade. In Ahmedabad, the second largest centre of the industry in India, finance for the mills was partly provided by a system of short-term deposits. See Mehta, M.M., The Ahmedabad Cotton Textile Industry. Genesis and Growth (Ahmedabad 1982)Google Scholar.
33 Like the Empress Mills in Nagpur. See infra.
34 For a view stressing the role of Indians in the genesis of the system, see Kling, B., ‘The Origins of the Managing Agency System in India’, Journal of Asian Studies (1966) 37–48CrossRefGoogle Scholar.
35 In 1906–09, imports (almost exclusively from Britain) accounted for 57% of Indian cloth consumption, the handlooms for 27% and the Indian mills for 16%. Mehta, The Cotton Mills. By 1930 the respective shares of imports, handlooms and mills were 35%, 23% and 42%. Calculated from Bagchi, , Private Investment, Table 7.1, 226–27Google Scholar.
36 On this aspect, see Morris, M.D., The Emergence of an Industrial Labor Force in India. A Study of the Bombay Cotton Mills, 1854–1947 (Berkeley 1965)Google Scholar.
37 Imports from Britain declined from 1,248 million yards in 1929–30 to 206 million in 1938–39, while Japanese sales fell only marginally from 562 to 425 million. Bagchi, , Private Investment, Table 7–5, 238Google Scholar.
38 While cloth imports had all but disappeared by 1941–42, exports reached 819 million yards in 1942–43, and remained at a fairly high level during the following years. From Annual Statement of the Seaborne Trade of British India, Calcutta, for the relevant years.
39 McGreevey, W.P., An Economic History of Colombia 1845–1930 (Cambridge 1971) 199Google Scholar.
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41 Thus during the 1930s in Brazil, industrial production more than doubled, and maintained an average growth rate of 5.2% during the 1939–45 period. Beer, W., The Brazilian Economy. Growth and Development (New York 1983; 2nd ed.) 34 ff. In India, according to Sivasubramonian's estimates, industrial production doubled during the period between 1929–30 and 1946–47. The average growth rate for the whole period was around 5% as against a rate of 7% or 8% in Brazil. In other countries, growth rates were less high than in Brazil but higher than in IndiaGoogle Scholar.
42 Dean, , The Industrialisation of Sao Paolo, 61–63Google Scholar.
43 Ibidem, 63.
44 Ibidem, 31 and 113.
45 FVersiani, .R., ‘Before the Depression: Brazilian Industry in the 1920s’, in Thorp, R. ed., Latin America in the 1930s. The Role of the Periphery in World Crisis (Oxford 1984) 163–187Google Scholar.
46 The firm, which had been started in the 1870s as a branch of a grain trading firm in Belgium, started diversifying into industry in 1897, firstly with flour mills, and a later stage with various concerns in the food, textile and chemical industries. Katz, J. and Kosacoff, B., ‘Multinationals from Argentina’, in Lall, ed., The New Multinationals, 196–197Google Scholar.
47 Ibidem, 177.
48 Dean, , The Industrialisation of Sao Paolo, 119–120. Dean himself appears doubtfulGoogle Scholar.
49 See Harris, F., Jamsedji Nasserwanji Tata. A Chronicle of his Life (Bombay 1958; 2nd. ed.)Google Scholar.
50 See A Short History of the ‘Empress Mill’, Nagpur (Bombay 1927)Google Scholar.
51 Steel production started in Brazil on a very modest scale in 1926, but was really established with the starting of the Volta Redonda mills in 1946. Chile's first integrated steel mill started production in 1950, Colombia's in 1954. Integrated steel production in Argentina dates from the late 1950s.
52 For detailed data, see Sarkar, S., The Swadeshi Movement in Bengal 1903–1908 (Delhi 1973)Google Scholar.
53 Largely thanks to the passing of the Steel Protection Bill of 1924 which imposed high duties on imports of non-British steels. Since the Tatas' most dangerous competitors were the Belgian and not the British mills, they benefitted by this measure.
54 See Lehman, F., ‘Great Britain and the Supply of Railway Locomotives in India: A Case Study of “Economic Imperialism”’, Indian Economic and Social History Review (1965) 297–306Google Scholar.
55 Like Villares, Nardini and others. See Versiani in Thorp ed., ‘Before the Depression […]’.
56 The Birla and Hukumchand jute mills in Calcutta. The Scindia Steam Navigation Co, the first big Indian shipping company, was created in 1919 by a group of Gujarati entrepreneurs.
57 Partly due to the adoption of high tariffs, particularly on sugar and paper.
58 See Khanolkar, G.D., Walchand Hirachand (Bombay 1969)Google Scholar.
59 The sole exception was the Associated Cement Companies, the largest producer of cement, itself the result of a merger between the cement divisions of several groups. In 1946, approximately half of the largest business groups operating in India were still controlled by Britishers. Markovits, , ‘Les hommes d'affaires […]’, 786–787Google Scholar.
60 In 1945–46, the textile industry accounted for over 25% of industrial output and over 30% of industrial employment. From Sivasubramonian, passim.
61 See Blakemore, British Nitrates and Chilean Politics.
62 While in 1913 the United Kingdom accounted for more than 60% of India's imports, by the late 1920s its share was around 40%.
63 Mainly steel, cotton, sugar and paper.
64 Although during the Second World War, the State intervened directly in the economy in many fields.
65 For instance in Argentina the firm of Di Telia, created by an Italian immigrant, pioneered new technologies in the field of petrol-pump and bread-making equipment. See Cochran, T.C. and Reina, R.E., Capitalism in Argentine Culture: A Study of Torcuato Di Tella and SIAM (Philadelphia 1971)Google Scholar.