UNIT 2 EVOLUTION OF

ENTREPRENEURSHIP IN INDIA
Contents
2.0 Objectives

2.1 Introduction

2.2 Traces of Entrepreneurship in Ancient India

2.3 Entrepreneurial Pursuits in Medieval India

2.4 Entrepreneurial Scenario in Modem India Prior to Independence

2.5 Entrepreneurship in Select Communities in Post Independent India

2.6 Let Us Sum Up

2.7 Key Words

2.8 Suggested Readings

2.0 OBJECTIVES
In this unit, we will study the evolution of entrepreneurship in India from ancient times
till the modem era. After studying this unit you should be able to:

trace the roots of Entrepreneurship in Ancient India;

look at the entrepreneurial pursuits in Medieval India;

. evaluate entrepreneurial efforts of Indians in Colonial Period;

assess obstacles faced by Indians during the Colonial Period; and

understand the enterprising activities of Indians that surmounted the obstacles.

2.1 INTRODUCTION
Entrepreneurship has been in vogue right from ancient times in India. During the
medieval and early modem periods, it did not have the same vigour that was experienced
in the contemporary period in the Western countries. Rather, the people who took t.o
entrepreneurship during the British rule had to face insurmountable problems. In this
unit we would look into the factors that were mainly responsible for dampening the
entrepreneurial spirit in India. Certain policy decisions were made during that period,
which were detrimental to any kind of enterprise by the Indian people. Yet, in certain
parts of India, despite the unfavourable conditions, Indian entrepreneurship could not
be curbed.

2.2 TRACES OF ENTREPRENEURSHIP IN

ANCIENT INDIA
Indian society, prior to the Muslim and British rule, was confined to villages with its
base in the rural economy. A village, or at the most, a group of adjacent villages within
a particular area was the primary object of focus. This was due to minimalist demands
of the people. The nature of consumption, therefore, was far less diversified, in
comparison to that during the later periods. This self-sufficient characteristic of the Evolution of
rural society & economy, in fact, protected the artisans from external pressures of Entrepreneurship
in India
competition. In view of this situation, manufacturing activities were localized and less
specialized. They continued to remain at a nascent stage for long and the situation
was more or less uniform all over the subcontinent. Even though this was general
situation during the period, Historians like Romila Thapar have a different perspective.
They point out "building of roads opening up the subcontinent and attempting to develop
a uniform system of administration" during the Mauryan period and "the occupation
of north western India by non Indian people" as factors that gave rise to the Mercantile
comrnunity.

2.2.1 Growth of Entrepreneurship in Ancient India : Guilds

In ancient India, Guilds became an increasingly important factor in the urban life,
both in their role in "organization of production and in shaping of public opinion".
Artisans, being unable to compete with the guilds in their individual capacity, had no
alternative but to join them. Besides, the Guilds offered general security and social
status. Guilds, like present day companies, had to register in a particular locality and
had to take prior permission from the authorities in order to shift their location. Artisans
of different crafts formed different Guilds. There were Guilds of potters, metal
workers, carpenters, and so on of others. To cope with the demand for certain
commodities, Guilds had to, at times, hire labour and slaves.

Guilds framed rules of work, maintained quality of finished products and fixed prices
to safeguard both the interests of the customer and the artisan. There were Guild
courts to control the behaviour of its members. It even interfered with the private
affairs of its members. The Guild, because of its association with a particular caste,
had little problem in having a constant supply of members. Offspring of members
belonging to a caste or a sub-caste often had no other option but to joining the same
profession as did their elders. It was only during the period of transition when a caste
or a sub-caste as a whole changed its occupation was there a threat to the Guild.

Manufacturing activity took place in areas where raw material was easily found, or
where there was a tradition of a particular craft. Artisans migrated to these areas
from the surrounding places. Thls was more so especially with the spinning and weaving
of cotton and silk. Guilds also played the role as centres of technical education. Besides
imparting knowledge related to a specific craft, it also improved upon it. The Guilds
took out processions with banners and insignia on festive occasions. It was a kind of
publicity. They also made their presence and concern felt by donation to charitable
causes and to religious institutions. Though the Guild leaders were powerful figures in
the urban life they did not cherish political ambitions. Politics was considered the
prerogative of the King.

2.3 ENTREPRENEURIAL PURSUITS IN

MEDIEVAL INDIA
In the Medieval period of Indian History, during the Muslim Imperial rule in most
parts, Guilds became weakened. Excessive outflow of Rural surplus, unproductive
usage and sustenance of urban lifestyle and engaging the resource constantly were
the major factor responsible. However, the manufacturing activities of Rural India
maintained their distinctive characteristic of being uniform. But they became limited
in kind or scope. From this period, relationship between the townships and the rural
areas became increasingly exploitative in nature. The rural produce invariably flowed
to the townships without any substantive reciprocal return. This is to say that in real
terms the direction of flow was one way. Village products, both agricultural and non-
agricultural, went to the towns, in return for cash, which was again siphoned back to
the townships in the form of land revenue.
 Understanding The towns were the concentration centres for the surpluses and revenues collected
Entrepreneurship
ftom the rural areas which were primarily utilized in the wars and the aggrandizement
of the Muslim rulers. Thus the resources mobilized from the rural areas were never
ploughed back for the development of these areas for development of rural people to
raise their per capita income.
2.3.1 Mal-integration of Rural and Urban Economy
Apparently manufacturing activities in the towns were quite well pronounced along
with a developed system of banking and merchant capital. Urban industries unfortunately
had to be oriented to aristocratic consumption and exports, which had relatively a
small market. The consistent drain from the rural sector had made the vast majority of
rural folks pitifully poor. Without the necessary purchasing power the rural population
did not have the "capacity to stimulate the growth of organized factory type industry in
the towns of Mughal India. The cash which the majority of peasants received by
marketing their crops went into the payment of the heavy land revenue demand which
thus checked the growth of rural consumption and the formation of a large domestic
market for mass-produced industrial goods."
Even, the export of merchandise to other countries failed to stimulate industrial activity,
or for that matter any economic activity. This was because the things imported in
return were mostly precious metals like gold, silver and valuable stones, which were
used for non-productive purposes and hoarded. Thus they constituted enormous
unproductive wealth.
Due to the virtual non-existence of any link between urban industries with the rural
mattkets, merchants were highly dependent on extraction of the villages by the then
rulers. Thus the entrepreneurs in Mughal India did not have "independent base in the
production system" like their western counterparts had and consequently [Link] in
no position to exert requisite political pressure to rectify the mal-integration between
the rural and urban sectors.

Check Your Progress 1

Note : i) Space is given below for your answer.
ii) Compare your answer(s) with the text.
1) How were the Guilds reflecting the caste system and hereditary occupations
in Ancient India?
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'2) What differences do you find in the rural entrepreneurshipactivities of Ancient
India and Medieval India?
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I 2.4 ENTREPRENEURIAL SCENARIO IN

-
With the establishment of ~ i t i s imperial
h rule in India, rate of extraction and exploitation
further increased, though in a much more invisible and sophisticated way. Earlier,
 during the Moghul rule, the surplus produce and resources were concentrated in the Evolution of
Entrepreneurship
towns within the country but with the coming of the European rulers the surpluses in India
and resources of the subcontinent were drained to other countries converting 'India
into a colony.
After India's subjugation, the policies and the measures adopted by the British were
primarily to extract maximum surplus from the hinterland of the subcontinent. It was,
of course, done in a much more sophisticated way than an outright plunder. By the
settlement of 1793, the land revenue in Bengal was permanently fixed. The low
prices at which jute and indigo were obtained from the peasants were very calculated
methods of extraction.
2.4.1 Exploitation during the British Colonial Rule
Compared to the large volumes of merchandise exported, the amount of merchandise
imported was proportionately less. What was imported to counterbalance the export
was detrimental to Indian economy while it was a stimulus to the British economy.
Goods that were imported to India were factory made products for mass consumption.
It created a market for itself also in the rural areas affecting the traditional cottage
industries which resulted in more unemployment and siphoning out of money. There
was hardly any import of machinery to enable the native entrepreneurs to set up
industries to produce commodities for mass consumption. At least till the beginning of
the World Wars, the Indian entrepreneurship was faced with insurmountable hurdles
purposely erected to protect British interests.
A large part of the export had to compensate for the induced import of services and
duties for the stores given to government of India by the government of Britain. The
home charges that the government of India had to incur were to meet the expenses
for civil and military administration (much of it for military operations outside India to
protect British imperial interests) stores purchased in Britain, and the interest on
loans given to India for its so called development such as construction of railways and
canals for irrigation. Both the railway and irrigation projects were indirect boosters to
the British economsr as it was a great stimulus to the heavy engineering industries in
Britain. Moreover, the ra~lwaynetwork and irrigation projects were so designed that
those who were to directly benefit were only badly affected. The manner in which
the projects were constructed was entirely oriented for export trade at the cost of
I ruining the food producing peasant economy.
I
iI Since the loans given to h d i a were used for unproductive purposes as far as the
interest of India was concerned it could not be paid back in due time. The interest
burden kept swelling, putting the country more and more in perpetual debt. Besides,
the large quantities of gold and silver whlch was imported, seriously affected commerce
I
and industry of India. Gold was primarily hoarded which was used during periods of
crisis. Silver was circulated as currency. Till 1893 large quantities were imported
especially because of the monetary policies adopted by Government of India to continue
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with silver as the medium of currency even though the value of gold and silver was
declining in the international market. Consequently the value of Indian currency kept
falling which had the direct effect of devaluing the Indian products for exports.
Thus the depreciation of Indian currency resulted in devaluation of Indian products
necessitating larger quantities of exports to be at par with the international exchange
rate. Continuation of such monetary policy with free import of bullion and with full
knowledge of the devaluation was a planned strategy to favour the British exporters
and the government.
2.4.2 Hurdles Created for Indian Enterprise
Other services like banlung, insurance and shipping, for which the Government of
India had to pay, constituted the invisible services. Such services were not a free
choice that India could make among the best available in the international market.
The lndian efforts to build such service industries were throttled by the monopolistic
tendencies of Britain. It stunted the growth of the indigenous business complex of
Understanding banking, insurance, ship building and shipping which had at one time thnved in Gujarat.
Entrepreneurship
India also had to pay for all the White people invited to be employed as businessmen,
professionals and administrators. Remittances on private account of such people wiped
off quite a substantial amount of the gains from her export of goods. The imported
labor was the most expensive in the world. India had little choice in its import and it
was made to work often against the Indian interests.
Factons elaborated above were obviously responsible for stunting the organic growth
of the Indian economy. Rather it accentuated the mal-integration between the various
sectors in the economy. In doing so it led to further impoverishment and perpetuation
of a dependent economy and low level of development till the beginning of the Wars.
2.4.3 Divergent Views
There has been a long standing debate among the economic historians regarding the
slow pace of industrialization in the subcontinent. One of the main points of enquiry is
very urnsatisfactory pace of progress of the native entrepreneurs and the rapid strides
in progress by their westerp counters. Though steam engines had been introduced in
India at almost the same period as they were in the West, the low level of the economy
and its subordination to the Imperial power checked industrial growth. A.K. Bagchi
claims that the problem was essentially because of lesser demand for factory produced
products. According to him there was not much dearth of entrepreneurship, resources,
technology and other requisite input factors as it was the dearth in demand. In other
words there were instances of entrepreneurs who were capable of mobilizing resources
and setding up industries but they failed miserably because of lack of demand for their
products. He points out that there was, in fact, under-ptilisation of available resources.
To produce commodities at a cheaper rate the kind of mass scale production that was
required was not possible in India because its entrepreneurs did not have access to a
broad based international market as were their western counterparts.
Other historians like M.D. Morris stressed on the problem of supply side without
denying the limited demand. According to him, India did not have sufficient
entrepreneurship, funds and resources. He agreed that there was a lesser demand for
factory produced products. Backward organizational and technological structure was
a severe constraint for industrial growth. The extreme difficulties in arranging resources,
machinery & equipment, technological know-how, skilled labour used to factory mode
of production, managerial expertise, and finding out channels of market were considered
to be heavy deterrents for the native entrepreneurs. It was no easy task to get
machinery and technological know-how from abroad and adapt it to the prevailing
Indian conditions, train persons without any institutional set up, provide power and
meet other complementary imperatives. Under such circumstances there was grea{er
need for both fixed and working capital while capital itself was costly. All these together
were bound to make the finished product excessively expensive, leaving the
entrepreneurs unable to compete with their foreign counterparts.
Encompassing both the views, people like Rajat K. Ray, are of the opinion that
the limiEed demand and the difficulties faced on the supply side were actually
two consequent effects of the low level of the economy like two sides of a
coin. In other words, both the lack of demand and the insurmountable difficulties
faced in setting up of industries were because of limited capital resources available in
the economy of the subcontinent. The subsistence level existence of the people in
general, was responsible for lack of domestic demand and also for less mobilization of
surplus resources required to ensure vigorous industrialization along with other ancillary
activities.
2.4.4 Impact of World Wars
During the period between the two World Wars there was a marked change in the
industrialactivity in India. From 1913 to 1938, the large scale manufacturing output
was at the rate of 5.6 percent per annum which was much above the world average
26 of 3.3 percent. This happened primarily because of the thirty-year crisis in Europe.
 There were two important changes in matters of investment during this period. Firstly, Evolution of
Entrepreneurship
there was diversificationof industrial activity in many new directionswhile the traditional in India
industries like jute and others maintained a comparatively slow pace of growth.
Secondly, due to some constitutional reforms, reluctance of initiative and withdrawal
of investment on the part of the British businessmen. involvement and share in terms
of investment of the Indian entrepreneurs in and their control on capital formation
grew to a considerable extent. Thus a number of business houses who were to be the
future captains of the Indian industries gradually came into the picture.
2.4.5 Need for Government Intervention
i,

Unfortunately, the growing population and the vagaries of monsoons, counterbalanced A

the progress on the Industrial front. Besides, there was l- lrdly any appreciable rate of
growth of small and cottage industries. As far as the prevailing rate of industrialization
was concerned, given adequate time, there was slow expansion of demand and
difficulties of supply constraints were not much of a problem, according to Bagchi.
For an industrial take off wh~chhappened in Russia or Japan, a rate of much higher
order was essential. The supply constraints stood as formidable barriers against any
attempt for a higher rate of industrialization. Huge amount of capital was needed for
investment on basic industries, power, tranbport, communications,irrigation and drainage
systems. To create the essential infrastructural facilities, massive social overheads
had to be placed on education and public health in order to break the supply constraints.
Doing so would necessitate an expansion of demand. There being an interdependence
between the reduction of the supply constraints and the expansion of demand, both
could be effectively solved by huge doses of capital. Unfortunately, India was far
short of the amount of capital required to have the rate of industrialization necessary
for a take-off of the economy. This was not possible with mere private initiative. The
involvement of government in injecting the requisite capital, drawing up a plan with
clear pnonties and sequences and having relative control on production and distribution
was of paramount importance to gear up the economy and enable the private initiative
to be vigorous and complementary.
i
1I Check Your Progress I1
Note : i) Space is given below for your answer.

I
I ii) Compare your answer(s) with the text.
I
1) Examine the impact of British Colonial Policy on the Indian economy?
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2) Why did the colonial trade policy stifle the growth of Indian entrepreneurial
efforts?
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3) How did the Colonial System make a change to the rural life in India?
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27
 *
Understanding
Entrepreneurship 4) Comment on the debates between different schools of Historians on the
question of handicaps to industrial growth in Colonial India.
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5) What changes took place in Colonial India's industrial scenario between the
two world wars?
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2.5 ENTREPRENEURSHIP IN SELECT 1

COMMUNITIES IN POST-INDEPENDENT q

INDIA
Before we go into the era of post-independence industrial entrepreneurship, it is
t
worthwhile to take the social roots of industrial entrepreneurship during the British
rule. To begin with, after making money in trade, labour contracts and financing tea
and indigo plantations, the Europeans ventured into industry, like Bird and Company,
Andrews Yule, Binny and Company, etc. to name a few. Rarely did tea or indigo
planters or persons running specialized industries grew into big industrial owners. Only
those who had business wide-ranging or an extensive government patronage could
become such.
Some authors like Brimmer are of the view that those Managing Agency
houses were real entrepreneurs in India. They adopted new methods of production,
sought new sources of raw material, introduced new products and ventured into new
markets. The European Managing agencies were involved in trading, agency, industry
and financing. Thus there was hardly much distinction between commercial and
industrial interests. Whereas the Indian managing agencies which gradually grew into
large industrial firms, though involved in other fields of business, in due course, were
oriented more towards industrial activity. For example, the Tatas were to a greater
degree involved in industrial pursuits than other kinds of businesses.
2.5.1 The Parsis
Among the Indian communities, the Parsis came into early prominence to compete
with European businessmen and gain a sizeable share of control in trade and industry.
Some are of the view that they possessed protestant-like ethical value-system which
enabled them to be prosperous. Possession of enterprising qualities was intrinsic for
the Parsis as a community. This view is contested as one finds other Indian communities
who, in due course also, came into the forefront of industrial activity. The Brahmins of
Ahmedabad controlled the cotton mill industry.
Giving due importance to the special qualities of the Parsis, however, it is essential to
consider the initial advantages they had because of the prevailing circumstances and
their location, which played an important part in protecting them from severe
competition. .
The Parsis as a community had settled In India for nine hundred years before they
took to trade. They primarily depended on land for their living. They were not bound
by rules of the caste system. Besides, no gainful occupation was considered shameful Evolution of
Entrepreneurship
by them. When the European merchants landed on the western parts of India by sea, in India
the Parsis had no inhibition to work for them as go betweens. Coming in contact with
the Europeans quite early, they got the needful exposure with the outside world which
initially enabled them to be brokers, agents or interpreters for the British and Dutch
merchants and later in trading with the other foreigners. When the British established
the port and a factory at Bombay, many of the Parsis went and settled there. As
Bombay prospered with the decline of the port at Surat the Parsis also prospered.
They accumulated a lot of capital first from opium trade and then from cotton trade,
especially during the American Civil War.
The other important factor which went in favour of the Parsis in comparison to their
eastern counterparts was that they belonged to a region which, till quite late, was not
under British influence. Western India did not experience the dastardly conquests
and plunders of the early British East India Company. For long the British were
resisted by the Marathas of this region. The Parsis worked alongside the British and
were also financiers. During the period, they were also friends with the British. During
the Indian freedom struggle they played an important role in the Bombay Presidency,
both in entrepreneurship and political struggle.
The hinterland of Bombay was not as extensive as that of Calcutta and before the
coming of railways, western India was quite inaccessible. The relatively arid Deccan
Plateau was not favourable for plantation of tea or indigo and the region did not have
rich mines like Bengal and Bihar. Thus there was not much reason for the British to
be attracted and establish themselves in Western India for a long time. Thus late
British interference enabled not only the Parsis but all the other communities involved
in trading to build up and face lesser competition from the British than their counterparts
elsewhere did. Even after the fall of the Peshwa in 1818, many of the chieftains like
Scindias, Gaekwads and Holkars continued to be rulers of large areas. The British
did not find enough time to entrench themselves by uprooting all others as they did in
the eastern parts and soon they had to give in to the demands for concessions for the
indigenous competitors because of wider political considerations, due to primarily
European crisis and the National Movement in India.
One particular Parsi enterprising family was the Wadias, who were known for
shipbuilding activities. They were the suppliers to the East India Company. Lack of
inhibitions to go on overseasjourney probably made them more flexible in their trading
activities and put them in an advantageous position to acquire technical knowledge.
The Parsis were not only a conspicuous lot in industry but also out-numbered all
others in the supervisory jobs in cotton mills. Their enterprise was not limited to
trading and industry. They were also esteemed for their highly developed civic sense.
Further, the Parsis were known for generously donating money for public causes. It
is said that because of them Bombay though initially faced with excessive congestion
became a far better and developed city than did Calcutta. In all the activities, the
Parsis took a lead.
2.5.2 The Bengalis
The Bengalis had come in contact with the British perhaps much earlier than the
Parsis did. Interestingly, till quite late into the 20" century, the Bengalis kept themselves
aloof from trade and industry. It is generally held that the predominant section of the
Bengalis (the middle classes) looked down upon trade and industry and preferred to
be professionals. Also the long gestation period of industry did not promise quick
returns, so the Bengali Businessman felt satisfied with trading. Moreover, the big
merchants of Eastern India having invested their money in becoming landlords were
thus eliminated by the Permanent Settlement from venturing into industry.
Amiya Bagchi, while considering the Permanent Settlement as probably a very
important reason for converting the rich merchants into landlords goes further to
point out that the British trading activities had left very little option for the businessmen,
Understanding other than becoming landlords. As the Permanent Settlement was not enough, to do
Entrepreneurship
away with the proble~nof the native financier, the Bank of Bengal was established
just to lessen the dependence of the East India Company on the lndian bankers and
traders for finance. The policy of the British had been to appropriate all the advantages
leaving rio scope for the native people to benefit out of business.
However, later efforts were made by Bengali traders to set up industries even under
trying circumstances. Against all odds, Bengal had produced outstanding persons like
Dwarka Nath Tagore (1829) who organized the Union Bank in association with the
European Merchants. He became the pioneer in many fields like industry and steam
navigation on the rivers of India. Blair King has credited him as the founder of the
Managing Agency system. After Tagore's death there was a virtual lull in individual
activity among the Bengalis with the entire Bengal and the adjoining areas converted
into a massive farm-yard to meet the requirements for Britain's exports and raw
materials for mass production consumer industries.

2.5.3 Racial Discrimination

Explanation about the enterprising nature of the Indian Communities suffer from racial
discrimination of the British Historians. To say that the Bengalis who were good traders
were not interested in Industry is incorrect. If this explanation is correct, then how
could the British who were good traders were also equally good in Industrial
Entrepreneurship? Besides, how do the same Indian communities emerge as aggressive
entrepreneurs after first world war? Basically the utter lack of Indian entreprenebrship
may be attributed to three main factors : First, orientation and limiting Eastern India
towards raw material supply for exports and the needs of industries of the Europeans;
second, the additional advantages enjoyed by the Europeans due to their early start in
Industry, third, discriminatory policy adopted by the British Colonial government to
reinforce the European control of trade and industry.
The policy of racial discrimination was very much a part of the British administrative
set up. Concrete evidences of this are provided by contemporary observers including
that of the administration of the period. It was anply expressed in the legal system
which was partial towards the British by sanctioning, in many instances, less punishment
to them than the Indians for the same offence. Social segregation stood as a barrier
for the Indians, these debarred them from any privileges enjoyed by the British. The
Tndians were looked down upon as inferiors because of their colour and origin.
The racial d(iscrimination affected the Indians in their day-to-day life in many ways.
The lndian businessmen depended on the railways, for handling their goods, the higher
posts in the railways were manned by the Europeans. They were flexible to their
fellow British businessmen while being unduly rigid to the Indians. This is probably
also reflected in the approach of the financial institutions which were controlled
eventually by the Europeans. The discriminatory policy also showed itself in the
appointments to responsible positions.
Even though some Indians had degrees from technical institutions they did not get due
opportunity for the much needed practical training. The European businessmen
preferred their own fellowmen in most of the technical appointments. Virtually all the
supervisory posts requiring technical expertise of high order were filled up by the
British. Their discriminatory policy stunted the growth of indigenous technical personnel
who were vital for the enterprises.
2.5.4 Advent of Indian Entrepreneurial Comnlunities
Before the First World War, those who tried their hand in industrial venture seldom
belonged to the trding communities. Many of them happened to be professionals like
doctors and lawyers; often the landlords were also associated.
In Bengal, the National Tannery was started by Nilratan Sarkar. Dr. P.C. Roy is
considered tue founder of Bengal Chemical and Pharmaceutical works. Maharaja
 Mahindra Chandra Nandy and Baikunthanath Sen collaborated to establish the Calcutta Evolution of
Entrepreneurship
Pottery. Sir Rajindra Nath Mukherjee on his own mcrit was a great entrepreneur in India
though he was compelled to join Acquin Martin and form the Martin and Company to
get construction contracts.
In Bombay, Dr. Balchandra Bhatwadekar and Laxrnan Rao Kirloskar were known
for their industrial enterprise. Kirloskar, supposed to be one of the most imaginative
entrepreneurs, started manufacturing agricultural machines. In Punjab, the Electrical
Supply Company Limited, the Bharat Insurance and many other companies including
cotton mills were founded by Lala Harkishan Lal. A lawyer by training, he belonged
I
to the Arora Caste. In the United Provinces the Raja of Barot and Raja of Bandi
(Bihar) had started a sugar factory and the Kirtyan and Iron and Steel Works Limited
respectively. Unfortunately both the enterprises failed, the latter due to the refusal of
government to procure iron and steel castings. In Ahmedabad, Ranchood La1 Chotalal,
II a Nagar Brahmin, established a cotton mill on modern lines. In 1847, he failed in his
first attempt but again in 1851 he raised money and against all odds was able to
I reopen the mill in 1861. The trading communities of Jains and Vaishyas of Ahmedabad
I
I and Baroda refused help when he had approached them for money.

Check Your Progress 111

Note : i) Space is given below for your answer.
ii) Compare your answer(s) with the text.

1) How did the permanent settlement cease native entrepreneurship in Bengal?

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2) How did the Parsis adapt themselves to the changes during Colonial times
in Bombay Presidency (Province)?
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3) Write a note on the Bengali enterprising efforts. Why were the Bengalis
different from those of Parsis?
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4) List out the major differences in the economic situation of the western
Indian Provinces and that of the centraveastern India.
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Understanding 2.5.5 Swadeshi Movement
Entrepreneurship
As the National Movement picked up, there was deliberate boycott of foreign goods
by the people. At that time many industries were set up to meet the requirements of
the people. An example is the Swadeshi Mill, started by Jamshedji Tata after the
partition of Bengal in 1905. There was a unity of purpose between the political leaders
and the entrepreneurs during the Swadeshi movement. One of the mills, Krishna Mill,
had advertised in the Tribune of April 13,1905,with the following appeal: 'Our concern
is financed by native capital and is under native management throughout'. The Swadeshi
movement enabled much money to be mobilized and invested in industrial ventures
under the control of indigenous management.
As the environment became relatively favourable for proper investment, many of the
industries proved to be successful and the native trading communities other than the
Parsis (who were into industry much earlier) were drawn into industrial enterprises.
Just befort: and during the First World War, the Indian traders were involved in glass
and match manufacturing.
In the period between the two world wars, the trading communities in other parts of
the country also came to the forefront of industrial activity gaining ample strength in
due course. In Delhi, Lala Sri Ram, the leader of the large business group and founder
of the Delhi Cloth and General Mills along with a large number of sugar mills, belonged
to an old banking family. Dr. G.C. Narang, a Vaisya by caste and lawyer by profession,
led the Narangs who later controlled a large number of sugar mills.
2.5.6 Emergence of the Marwaris
The Birlas established themselves in Eastern and Central India. Juggilal Kamplapat
Singhania emerged into Province at Cawnpore (Kanpur) by initially setting up cotton
mills and industries producing gur, oil, flour, and sugar after the War started and later
diversified into other fields. Another contemporary, the Dalrnias, a Jain Family had set
up sugar mills and later they gained enough strength to diversify into other fields and
put up a stiff challenge to the Associated Cement Companies on the one hand and the
European controlled paper mills on the other. Among the M-aris, Walchand Hirachand
rose to prominence. He founded the Scindia Stream Navigation Company in 1919
along with Kilachand Devachand and Narottarn Morarjee. They even took over the
premier construction company of the Tatas.
2.5.7 Enterprise in South India
Traders entered the field of modem industry in a big way in 1920s and in greater
numbers in the nineteen thirties. For instance, in Madras, the Nathukotai, who had
wide trading and money-lending interests in the whole of South Asia did not enter
large scale industries in significant number until protection was ensured by imposition
of tariffs and loosening of the grip of the Europeans in Southern India.
In the south, other communities apart from the Chettiars also gradually got involved in
industrial enterprise. The cheap electricity from the Pykar Hydroelectric Scheme made
it suitable for the growth of cotton mills. Besides, due to the depression in agricultural
production resulting in the extreme indebtedness of the peasants many men with surplus
capital instead of lending to the peasants tried to benefit from industries. Moreover,
the Mysore State Government patronized both the state controlled and private enterprises
with cheap financial assistance. land and other privileges.
2.5.8 Scenario in other States
Similarly in other native States of India such as Baroda and Gwalior, various incentives
like cheap labour and free or cheap land attracted many entrepreneurs and there was
a marked growth of industries. Mostly the trading communities like the Gujaratis and
Marwaris took advantage of such situations. The Tatas were the most successful in
the Parsi community. F.E. Dinshaw is known for his business acumen and helped out
many struggling mills to survive under unfavourable circumstances. He is credited
with bringing about a merger of cement companies which led to the birth of Associated Evolution of
Cement Companies. The Bombay Dyeing and Manufacturing Company started by Entrepreneurship
in India
Sir Ness Wadia was supposed to be one of the best cotton mills in India. Apart from
a few Parsis like the Tatas, most of the Parsis were found'to concentrate on the
particular region.

Check Your Progress IV

Note : i) Space is given below for your answer.
ii) Compare your answer(s) with the text.

1) In what ways did the Swadeshi Movement kindle the spirit of enterprise of
Indian Communities?
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2.6 LET US SUM UP

The rapid spurt of industrial enterprises was not without shortcomings. In spite of the
failure of many of the Ventures due to the British policies of discriminationand colonial
policies that stiffed the Indian enterprises, the following major features could be noted :
Those belonging to communities like the Parsis, Gujaratis and Marwaris dominated
the Industrial scene.
Industrialization, and consequently development, was localized at a few places
like Bombay, Ahmedabad, Calcutta and Kanpur.
Only those industries were successful which generally met the need of the War.
The famed Indian entrepreneurial spirit, even though suppressed for centuries,
started becoming active and alive, as the freedom movements gained momentum
and India stepped into the threshold of an independent democratic statehood.
The overall effect of these developments led to only restricted growth and lopsided
development of the,country as a whole.

2.7 KEYWORDS
Centre of growth : An area or a region where there,is
concentration of economic activity leading
to more prosperity.
Enterprising communities/ : A society characterised by a high number
Society of innovative, motivated and energetic
individuals willing to start their own
ventures.
Guilds : An association of people for mutual aid or
the pursuit of a common goal like that of
craftsman or merchants.
Merchandise : Goods or products for sale or trade.
2.8 SUGGESTED READINGS
Bagchi, Amiya K., 'European and Indian Entrepreneurship in India 1900-30', in
Edmund Leach and [Link], ed., South Asia, Cambridge : Cambridge
University Press, 1970.
Baldwin, G.B., Industrial Growth in South India, Illinois : Glencoe, 1954.
Gadgil, D.R., The Industrial Evolution of India in Recent Times 1860-1939, Delhi :
Oxford University Press, 1971.
Ghosh, H., The Advancement of Industry, Calcutta, 1919.
Harris, F.R., J.N. Tata, A Chronicle of His Life, London : Oxford Press, 1925.
Joshi, Arun, Lala Shri Ram, A Study in Entrepreneurship and Industrial
Management, New Delhi : Orient Longman, 1975.
Karaka, Dosabhai Franji, History of the Parsis, Vol. 2, London, 1884.
King, B.B., 'The Origin of the Managing Agency System in India', in the Journal of
Asian Studies, Vol. XXVI, No. 1, November 1966, pp. 37-47.
Lamb, Helen, B., 'The Rise of Indian Business Communities', PaciJic AfSairs, Vol.
XXIII, No. 2, June 1955, pp. 98-126.
Masani, R.P., N. M. Wadia and His Foundations, Bombay, 1961.
Misra, B.B., The Indian Middle Class, London, 1961.
Piramal, Gita and Herdeck, Margaret, India's Industrialists, Vol. I, Washington, D.C.,
1986.
Ray Chaudhuri, T, The Cambridge Economic History of India, Vol. 1, C. 1200 - C.
1750, Cambridge University Press, 1982.
Ray, Rajat Kanta, Entrepreneruship and Industry in India 1800-1947, 1192, Oxford
University Press, Delhi.
Sinha, H., Early European Banking in India, London, 1927.
Thapar, Romila, A History of India, Vol. I , Harmond Sworth, Middlesex, England:
Penguin Books Ltd., 1966.
Timberg, T.A., The Mamaris :From Traders to Industrialists, New Delhi : Vikas
Publishing House Pvt. Ltd., 1978.