MODULE I:

Indian Business (Pre-

Independence Era)
Impact of British Colonization
Rationally, the impact of British colonization can be studied on the following five areas:

1. Agriculture

2. Industries

3. Foreign trade

4. Infrastructure

5. Social Reforms

Let us discuss this further:

Impact on agriculture
The British rule impacted Indian agriculture as follows:

a. Zamindari system: An unfair system where the ownership of agricultural land was in the
hands of Zamindars or the landowners while the land was cultivated by the farmers. The
revenue from the hard work of the farmers was divided largely between the British East India
Company and the landlord while the farmers barely survived.

b. Crops to be grown as per demand of the EIC: The local population had no say over what
crops to cultivate – what proportion of food crops and cash crops? Factor like local demand
for crops was, no longer the deciding factor. That control was with the British.

c. Food crops were exported to Britain to feed its citizens in Britain and other citizens and
soldiers in the British colonies or in countries where British troops were fighting wars.

d. Non-food crops were exported to Britain as raw material to meet the heavy demand of its
industries that had discovered the benefits and methods of large scale production in the post-
industrial revolution times.

Impact on industries:
a. Cottage and handicraft industries were destroyed leaving no local options for Indians

b. Local supply was stopped and Indians were forced to buy British, machine made goods at
high prices. Those found to use swadeshi were punished and such goods were destroyed.

c. Indian raw materials were exported to Britain at low prices to feed the demand of their
factories.
d. British goods made from Indian raw materials now had to be purchased by Indians at high
prices

On foreign trade:
a. British took complete control over foreign trade as well. They decided what to export and
where to export.

b. Raw cotton, silk was exported to Britain at low prices. c. Cotton and silk clothes were
imported from Britain at high prices. d. Construction of the Suez Canal in 1869 reduced the
transportation time between India and Britain and also the cost. But the financial gains again
went to the British and not to the Indians.

On infrastructure:
Yes. The British did bring Railways, Post and Telegraph and Pucca roads to India. But what
was their motive? Were they interested in providing benefits and improving the lifestyle of
the indigenous population? Their motive was to facilitate transport of materials and goods
within India towards the closest ports and sending them to Britain on ships and also
distributing British products within India.

Social Reforms:
It is a known fact that the British brought about reforms like widow re-marriage, making
bigamy illegal, abolishing child marriages, abolishing sati, controlling thugee. Travelling by
trains within India and travelling abroad by ships (for whom it was possible) can be seen as
the first steps in the efforts towards breaking down the caste structure. They also influenced
education in India by introducing the English language to the Indian elite – eg. Indian princes
who had British governesses and tutors in India, or even Indians who could go to England for
studies – like M K Gandhi, Dada Bhai Naoroji. They also introduced western technology to
train Indian engineers needed to build roads and railways. Again, was their motive truly
altruistic? In the case of introduction and popularization of English language; not really. In
the words of Thomas Babington Macaulay, a former British Secretary at War and a Historian,
the objective of introducing and popularizing the English language was to create a class of
persons, Indian in colour and blood but English in tastes, opinions, morals and intellect...who
may be interpreters between the British and the millions they govern.

Efforts to rise and gradually mature

Certain Indian communities made use of the so-called reforms by the British to educate
themselves, to travel to Britain, to study the industries there, to learn from their historians and
thinkers and take steps to help India rise - industrially and politically.
Contribution of the Parsi, Marwari, and Chettiar communities in those times is especially
noteworthy.

Business communities in India during the colonial period

The Parsis
The Parsis, whose name means “Persians,” are descended from Persian Zoroastrians who
emigrated to India to avoid religious persecution by Arabs. The exact date of the Parsi
migration is unknown. According to tradition, the Parsis initially settled atHormuz on the
Persian Gulf, but finding themselves still persecuted they set sail for India, arriving in the
8thcentury. The migration may in fact have taken place as late as the 10th century. They
settled first atDiu in Kathiawar but soon moved to Gujarat, where they remained for about
800 years as a small agriculturalcommunity. One of the main reasons why Parsis decided to
settle down on the western coast of India is because the Hindu king Jadav Rana offered them
a land where they can follow their own religion without any fear of conversion and
persecution. Parsis also had the permission to build their own temples that attracted more
Zoroastrians from across Persia. In India, they settled first in Sanjan and gradually relocated
to other interior towns like Navsari, Ankleshwar and Surat. Many others decided to move on
to other places like Dehradun and even in Sindh and Punjab provinces. Parsis built their own
fire temple in Sanjan called as Iranshah (King of Iran) initially in Sanjan where they landed.
Its fire is said to have been consecrated in 721 CE shortly after the Zoroastrians landed in
India. The fire was placed at the new location in Udvada, Gujarat in 1742 and it still remains
there today.

The Parsi’s had skills that allowed them to contribute in many different ways to bring
prosperity to the land. They quickly adopted the local language – Gujarati, while they were
still in touch with the native Persian language. They also adopted the local customs and
practices and their dressing style. It was the Parsi community which first developed among
non-Europeans in India modern industry and banking. This tiny enclave of Persians had
settled in Western India a thousand years ago but they retained their social Identity and
Zoroastrian religion. Hence, though many of the Parsi community speak Gujarati language
they remain a distinct religious and cultural group.

Parsi leadership and social position in Bombay in mid-nineteenth century were important
elements leading to the success of transition from commerce to industry. Some wealthy Parsi
families were among the "first families" of Bombay where they had come at the insistence of
the East Indian Company. Much of their wealth originated in foreign trade, especially the
China trade in opium and yarn. Parsi firms owned and ran the ships used in this commerce
and even supplied ships to the East India Company in the days before the advent of the steam
engine. In addition to conducting foreign trade for their own firms, members of these Parsi
families were hired by British trading firms to act as Commission merchants and brokers in
dealing with the Indian population. Even in the days when Portuguese held Bombay, Parsis
were middlemen between the Europeans and the Indians.
India, as we all know has been invaded by many foreign rulers and by the 15thcentury. Indian
land was ruled by foreign powers like the Portuguese and the Dutch. Even before they arrive,
the land was ruled by the Mughals who allotted lands and permissions to the Portuguese and
the Dutch to establish their colonies and factories across India. Parsis were already traders
and entrepreneurs by the time the foreign invasion happened. Many of the Parsis had already
moved down south to Bombay establishing their companies and businesses. In 1665, when
Portuguese handed over the power to the British (East India Company) Parsis were already
present all over the city with complete control on the economy of the city.

For East India Company, Bombay was the perfect place to handle international trade and
British soon found out that Parsis were entrepreneurs with a business mind-set. They had
great plans set for Bombay and making it into a commercial centre. To do that, they needed
the support of local traders and merchants and craftsmen and for them Parsis were the right
companions. Parsis collaborated with the British seizing most of the prime properties and
areas and boosting the economy of the country.

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. With the
establishment of British trading posts at Surat and elsewhere in the early 17th century, the
Parsis’ circumstances altered radically, for they were in some ways more receptive of
European influence than the local communities and they developed a flair for commerce.
Bombay came under the control of the East India Company in 1668, and, since complete
religious toleration was decreed soon afterward, the Parsis from Gujarat began to settle there.
The expansion of the city in the 18th century owed largely to their industry and ability as
merchants. By the 19th century they were manifestly a wealthy community, and from about
1850onward they had considerable success in heavy industries, particularly those connected
with railways and shipbuilding.

The Parsis who had migrated from Surat to Bombay and were originally carpenters by
profession took over ship repair and shipbuilding in partnership with the Company, took a
controlling stake in the important coastal trade in Malabar teak, moved into coastal shipping,
and eventually joined the Indo-Chinese trade in Malwa opium. The Parsis had other resources
that suited them to urban trade in particular. Being literate and multilingual (a number of
Parsi merchants could speak Portuguese and French), they were prominent in government
service, as clerks in European business firms and as assistants in attorney offices. As a
community they thus had fingers in a number of skilled services connected with commerce.

As per records, Parsis moved into Bombay by 1640, almost 25 years before British seized
power. In 1673, the British handed over a piece of land in Malabar Hill to the Parsi
community to establish their first, Tower of Silence (where Parsi funerals are held). Some of
the top Parsi entrepreneurs like Lowji Nusserwanji Wadia (shipbuilder from Surat),
Jamshetjee Jeejeebhoy (merchant), and Cowasji Nanabhai Davar (cotton mill entrepreneur)
entered the economic scene to boost Bombay’s earnings. East India Company made a very
handsome income from India’s first spinning mill – The Bombay Spinning Mill established
in 1854. This move impacted the Lancashire mill owners as East India Company saw that
they were making more income from Indian mills than from their own cotton mills. In 1870,
Bombay had 13 spinning mills; by 1895 the number of mills escalated to 70 mills and by
1915 Bombay was among the top cotton mill cities with 83spinning mills. It generated lot of
employment for the local Indians who were now quickly turning from farmers to workers and
traders. Jamshetji Tata gave India its first steel industry and hydroelectricity taking the
economy to a whole new level.

The first Parsi residents of Bombay were probably grocers for the town. In the eighteenth
century, one set of families, the Wadias, developed shipping, and three others, engaged in
commerce, reached Burma, China, Mauritius, and Aden. They set a pattern that was to
become the hallmark of Parsi enterprise in the nineteenth century. Their names were Banaji,
Modi, and Readymoney. Among the leading Parsi merchants of the nineteenth century,
Jamsetjee Jejeebhoy started as assistant in a firm selling opium in China, and when he
established himself in the trade, he gave business contracts to a number of relations and
friends. He also formed a partnership with a Gujarati Hindu and a Muslim merchant. These
inter-ethnic partnerships did not always work well, but they set a trend. For example,
Dinshaw Manockjee Petit was first an assistant and later partner to a European. His father
was a broker in a European firm. Jamsetji Tata served his apprenticeship as a merchant in
China opium. The Parsis partly ended up connecting Aden with Canton in their own ships.

The Parsis engaged in this foreign trade both as principals and as brokers for British firms.
Their knowledge of English and acquaintance with British business methods gave them a
signal economic advantage. They invested in British bank shares and sometimes became
directors of the early British companies. Influential Parsis became Bombay's first Indian
stock-brokers. By the 1850's these groups had achieved considerable social prestige. They
furthered education, sponsored railway development in western India, published newspapers,
and gave lavishly for civic improvements. The small Parsi community had early become
Britain's economic and political middlemen in dealing with the local population, receiving
valuable contracts and concessions in return. Wealthy Parsis adopted Western education,
sports, and dress, and sometimes even dined with the British. This roughly equal relationship
helped them to enter the industrial field since it made it possible for them to hire British
engineers and technicians-members of the ruling race-who were necessary for the operations
of their textile plants in the initial stages. Early in the twentieth century, small beginnings in
Indian heavy industry-steel and Indian engineering, electric power, and shipping- were made
by India's greatest industrialist, the Parsi J. N. Tata and his family. This was a real feat in the
face of the indifference, if not hostility, of the British administration and of British business
in India. This industrial leader belonged to urban banking and trading families. He attended
Elphinstone College, Bombay, and was remarkably non-traditional, bold, and imaginative in
outlook. Intent on developing India and freeing her from the grip of British capital, they
possessed the necessary organizing ability to translate visions into achievements with the
financial help of other members of their communities.

The Marwaris
The History of the Marwari’s
The Marwari or Marwadi are an Indian ethnic group that originate from the Rajasthan region
of India. Their language, also called Marwari, is a dialect of Rajasthani and is a part of the
western group of Indo-Aryan languages.

Etymology - The term Marwari once referred to the area encompassed by the former princely
state of Marwar, also called the Jodhpur region of southwest Rajasthan in India. The word
Marwar is considered to be derived from Sanskrit word Maruwat, the meaning of maru being
'desert'. Others believe that word Marwar is made up of Mar from alternate name of Jaisalmer
and last part war of Mewar. It has evolved to be a designation for the Rajasthani people in
general but it is used particularly with reference to certain jātis that fall within the Bania
ethnic category. Those communities, whose traditional occupation has been as traders,
comprise the Agarwals, Khandelwals, Maheshwaris and Oswals. DwijendraTripathi believes
that the term Marwari was probably used by the traders only when they were outside their
home region; that is, by the diaspora. The Marwari traders have historically been migratory in
habit. The possible causes of this trait include the proximity of their homeland to the major
Ganges-Yamuna trade route; movement to escape famine; and the encouragement given to
them to settle in kingdoms ruled by Rajputs who saw advantages in having their skills. Their
abilities were valued by Rajput rulers because, in the period prior to the influx of the British
to northern India, the Rajput kingdoms were often warring against each other and were also
practitioners of conspicuous consumption in their royal courts. The Marwaris made the
transition from being niche players in trading to becoming industrial conglomerates. From
being brokers and bankers, the Marwaris went on to break the British monopoly over the jute
industry after World War 1; they then moved into other industrial sectors, such as cotton and
sugar, and set up diversified conglomerates. By the 1950s, the Marwaris dominated the India
private industry scenario, emerging as the establishers of its most prominent business houses.
Marwaris who are involved in business include Kumar Mangalam Birla, Lakshmi Mittal,
Ravi Ruia, Gautam Singhania, Kishore Biyani, Jaidayal Dalmia, Ajay Piramal, Rahul Bajaj
and Sunil Mittal.

Marwari language Marwari, or Marrubhasha, as it is referred to by Marwaris, is the

traditional, historical, language of the Marwari ethnicity. The Marwari language is a dialect
of the Rajasthani language. The latter evolved from the Old Gujarati (also called Old Western
Rajasthani, Gujjar Bhakha or Maru-Gurjar), language spoken by the people in Gujarat and
Rajasthan3.

Marwari Entrepreneurs The earliest recorded account begins from the time of Mughal
Empire. Since the time of the Mughal period (16th century-19th centuries), particularly from
the time of Akbar (1542-1605), Marwari entrepreneurs have been moving out of their
homeland of Marwar and Rajasthan, and adjoining regions, to different parts of undivided
India. The first wave of migration took place during the Mughal period, and a number of
Marwari baniyas moved to the eastern parts of India, currently comprising the Indian states of
West Bengal, Bihar, Orissa, and Jharkhand; and Bangladesh. During the period of the
Nawabs of Bengal, Marwari vaishyas exhibited their acumen, and controlled the mint and
banking. Jagath Seth who controlled the finances of Murshidabad Darbar was an Oswal, one
of several sub-groups of Marwaris. The business houses of Gopal Das and Banarasi Das,
also OswalMarwaris, undertook large scale commercial and banking activities.

Several Marwari baniyas, after permanent settlement was introduced by the British Raj,
acquired large estates, in eastern part of India, particularly in Bengal. They included
Dulalachand Singh, a Porwal Marwari, who had acquired several Zamindaris around Dhaka,
currently the capital of Bangladesh, as also in Bakarganj, Patuakhali, and Comilla, all places
currently part of Bangladesh. These Zamindaris were managed and co-owned with khwajas
of Dhaka. Dulalchand Singh family also emerged as a business tycoon controlling jute trade.

After India’s First War of Independence (1857-58), when social and political disturbances
subsided, another wave of large scale migration of Marwaris took place, and during the
remaining period of 19th century, a number of Marwari business houses, small and big, had
emerged. The Marwari community controlled all the major business activities of large
geographical areas of the eastern parts of the Indian subcontinent. With a sizeable presence in
present day Myanmar and Bangladesh, they controlled major trading and commercial
activities in the regions currently comprising the Indian states of West Bengal, Bihar, Orissa
and Jharkhand. They also had almost complete control of indigenous banking, finance and
hundi. They took the hundi business to areas where the system was unknown, which included
Chittagong, Khulna, Naogaon, Mymensingh, and Arakan. They competed successfully in
these areas with Chettiars who were located in the region for long4.

The Chettiars
The Chettiars are a subgroup of the Tamil community originating from Chettinad in Tamil
Nadu, India. Historically, the Chettiars are most commonly associated with the moneylending
profession. The Chettiars originated from an area known as Chettinad in Tamil Nadu, India’s
southernmost state. Although popularly known as Chettys or Chettiars, this group is more
formally referred to as the Nattukottai Chettiars or Nagarathars. Nattukottai means “people
with palatial houses in the countryside” while Nagarathars refer to “city dwellers, traders and
temple-based people” in Tamil. The early origins of the Chettiars are shrouded in mystery
given the scarce historical records. The Chettiars claim to have originated from the ancient
kingdom of Chola the existed between the 10th to 12th [Link]-day Chettiars can
trace their roots to the 96 villages that originally made up Chettinad in Tamil Nadu. These
villages were organised under nine main temples. These temples served as the clan centres,
which were the main social and cultural spaces in the lives of the Chettiars. Each of these
nine temples may have overseen a number of smaller temples established in the Chettiar
villages.

From the mid-1700s to the late 1940s, the Chettiars were some of the most affluent merchants
in India. Their success in business caught the eyes of the British who made them the
middlemen to interact with the locals in Burma with whom they already traded. Soon, they
started trading in countries all over South East Asia, including Vietnam, Burma, Cambodia,
Malaysia, and Sri Lanka. By the late 18th century there were two prominent communities
within the Chettiars - the Nattukottai and Nagarthar - who rose into power by trading in
pearls, textiles, rice, cotton and other items. By the 19th century they had also gained renown
as moneylenders and bankers who provided credit6.

The term “Chettiar” is a caste label. The Chettiars were traditionally merchants and traders in
precious stones but later became involved in banking and money lending activities. Their role
in finance expanded with the growth of British colonial rule in Southeast Asia. Many
Chettiars emigrated from India to Ceylon (now Sri Lanka), Burma (now Myanmar) and
Malaya (now Malaysia and Singapore) as the British expanded their presence in the region.
Borrowers who loaned small amounts from the Chettiars had to sign a promissory note.
Those who took loans for larger amounts had to provide some form of collateral, such as
jewellery or a title deed. Interest was charged on the amount borrowed and the rate of interest
was listed in the promissory note.

The Chettiars generally conducted their businesses in kittangis (which means “warehouse” in
Tamil), which were usually shop houses. The Chettiars would set up their offices on the
ground floor of a kittangi. As Chettiars usually operated individually, each had his own safe
and wooden cupboards for conducting business. A Chettiar moneylender usually sat on the
floor and worked from a small wooden desk. There were also no partitions to separate the
various Chettiar moneylenders as they had their own designated spots for doing business.

While some of the Chettiars ran their own moneylending businesses, others were agents who
worked as employees for the owners of moneylending [Link] were paid a salary and
bonuses, depending on the profits made by the business. Each agent represented his employer
and was only contracted for a specific period of time. Before an agent’s contract was up, the
employer would send a newly appointed agent to understudy him. Once his contract had
ended, an agent would seek employment with other firms.

A Chettiar’s financial training would usually start in his childhood, where he would learn the
theory of banking and accounting from family members. Boys as young as nine years old
were rigorously trained in mental arithmetic and even taught to do mental calculations in
fractions. They would go on to serve their apprenticeship at various Chettiar firms once they
reached their teens7.

The great downfall The Great Depression of the 1930s, the Second World War brought with
it ominous winds of change. The war destroyed trade and the Chettiars lost their hold on the
world. Today, the villages of Kanadukathan and Palathur, in particular, are filled with these
magnificent structures. The tiles have lost their shine and the sturdy teak pillars have faded
with time and the silence that surround these stately homes brim with a thousand tales. While
some like the Bangala, Chidambara Vilas, and Chettinadu Mansion are now having a second
life as heritage homestays or are surviving on the charms of the special Chettinad cuisine,
there are many that just lie vacant. With younger generations taking up corporate jobs the
task of maintaining these homes fall to caretakers. Once in a while the mansions come alive
when the entire family congregates from all over the world for a wedding, which is still a
glittery affair.A few of the Chettiar families followed their nose for business and remained
successful. Business powerhouses like Murugappa Group, Chettinad Group, AVM Studios,
and MA

Chidambaram Group continue to survive. But still others had to resort to selling pieces of
their ancestral homes as antiques or demolishing their houses entirely to salvage tonnes of
valuable wood8.

The Chetiar way of Doing Business A Nattukottai Chetti is a born banker. From his earliest
childhood he is brought up on the family traditions of thrift and economy. When a male child
is born in a Nattukottai Chetti's family, a certain sum is usually set aside to accumulate at
compound interest and form a fund for the boy's education. As soon as he is ten or twelve, he
begins to equip himself for the ancestral profession. He not only learns accounting and the
theory of banking, but he has to apply his knowledge practically as an apprentice in his
father's office. Thus in a Chetti's training, the theory and practice of banking are not divorced
from each other, but go hand in hand, from the very start. When a boy is married he attains a
responsible position in the family. Though, being a member of the joint Hindu family system,
he may not make a separate home, yet he must bear his own financial burden. He is allotted a
share in the paternal, or ancestral, estate and he must live on it. He alone enjoys all that he
may earn and suffers for all that he may lose. So he naturally grows self-reliant and
ambitious, with a keen desire to build a fortune for himself

The Gujarati’s
Cotton, tea and jute mills together accounted for more than half of the aggregate paid-un
capital at the end of March 1882. Cotton was by far the most important from the viewpoint of
the capital employed. While cotton and jute companies employed just about a million rupees
of capital cach, tea companies employed only about a quarter of that sum. The ownership of
jute and tea industries was divided between the sterling and rupee companies. The largest
increase in capital stock took place in 1874. During 1873 and 1874, there was a net increase
in the capital of cotton mills amounting to Rs 23 million. The demand for tea was almost
entirely for export. Ships sailing from India to bring spices from East Indies or the produce of
China carried Quantities of piece goods, which were either sold at Malacca or bartered in
other islands for cloves or similar produce. Spanish ships occasionally carried Indian cloth to
the Far-eastern markets and the Philippines, and even to Mexico. Akbar's minister, Abul Fazl,
noted that very fine muslin was being produced in Sonargaon (modern-day Dacca). He spoke
with approbation the goods available in places like Benares, Mau, and Agra in the Gangetic
plain. Many travellers and merchants have testified to the high quality of the goods that could
be obtained Lahore, Multan, Burhanpure and Golconda. Production for export was in the
main drawn from four regions: (i) the Indus plain with the port of Lahari Bandar near
modern-day Karachi; (ii)the country along the Gulf of Cambay and as far south as Dabul; (iii)
the Coromandel Coast: and (iv) Bengal. The Gulf of Cambay was the largest trade centre for
goods from Ahmedabad, Pattan, Baroda, Broach and Surat, which were largely exported to
the east as well as to the west. Cambay cloth was sent to the coast of Africa, to Aden, and to
the Persian Gulf. Also to Ceylon, to Pegu, to Malacca and to all the other islands, and as far
as the coast of China. Merchandise from Eastern Coast of India was, however, largely
exported to Pegu, Malacca and other islands. Cotton carpets, coverlets, ropes and bed tapes
were also being made and the aggregate out:- turn was quite substantial. The industry of
dyeing, which depended mainly on cotton goods. was a significant industry. It used
indigenous vegetable dyes. Coloured goods were in large demand especially in Burma.

The Indian system of business organisation, in essentials, resembled that which prevailed in
Europe. The management of business had not been separated from the work of manufactures.
production was carried on by artisans, and they were conscious of the importance c: oa raw
materials in advance.

A substantial proportion of the raw silk consumed in India was used for the production of the
mixed goods which are still a feature of the hand-weaving industry. The Indian supply of silk
was supplemented by imports from China and Persia. The manufacturing centres of Gujarat
got their supplies chiefly from Bengal or China. Contemporary writers speak mainly of the
fabrics of Gujarat, notably of Cambay, Ahmedabad and Pattan. The production in Kashmir
used local silk. Akbar paid special attention to improving silk production in the country, and
silk spinning was brought to perfection. Common blankets were produced in large numbers.
The cheapest cost 10 dams. (Much of the consumption by the upper classes consisted of
imported goods.) The weaving of shawls mainly from goat's hair, was done primarily in
Kashmir and Lahore. Carpet weaving also was encouraged by Akbar, particularly at Agra and
Lahore.

Sacking made of jute fibre was in local use for packing. Cotton weaving was by far the most
extensive industry. Its aggregate production was one of the great facts of the industrial world
around 1600 AD. Pyrad says that everyone from the Cape of Good Hope to China, both men
and women, were clothed from head to foot in cloth woven by Indian looms. India supplied
most of the clothes worn by people living between Cape Gardenfui and the Cape of Good
hope. Arabia took substantial quantities of piece goods, which were carried also to Egypt and
the Mediterranean. On the other side of India, the Kingdom of Burma supplied a second
important market. The third market was Malacca and the group of other islands in the East
Indies.

Small, far from equalled the goods exported. The chief imports at the time were horses, el-
ants. raw silk, ivory, coral, Copper, lead, tin, Zinc, gold and quicksilver, as also some luxury
novelty goods. Foreign merchants, who were not in a position to supply these products, and
had 1o offer silver or gold in return for Indian goods. Europe at the time was able to supply
only a few of the goods in demand in India. Quicksilver reached India from Lisbon, and lead
was brought from Europe. And so were corals, woollens, French and Italian silks, wines and
spirits and glass and mirrors. The bulk of the imports, however, came from other parts of
Asia. Euro- pean merchants who desired to trade with India were faced with the initial
difficulty of to provide remunerative outward cargoes. The Malabar ports exported large
quantities of pep- per to Cambay and Broach. Indigo, cotton goods, rice and sugar were sent
from Bengal to Pegu Burma). Big quantities of dyed yarn, together with ginger, cardamom,
turmeric, various herbal drugs, lac, pearls and diamonds were exported from the Coromandal
ports.

Calicoes were produced almost all over the country and comprised plain cotton cloth which
could be obtained either unbleached or bleached and dyed. During the sixteenth century, the
Portuguese had developed exports of calicoes to West Africa and Brazil. Muslin was also
popular was largely exported to Persia, Arabia and Egypt. Dress and fancy goods, chintzees,
handkerchiefs, short dyed pieces of calico goods, woven with patterns and cloth with an inter
of Suk, were in great demand in the Asian markets. Dr Terpstra enumerates 42 types of goods
handled by the Dutch on the Coromandal Coast.

In a number of special fields producers set up their own associations. The Indian Jute Mills
Association was established in 1884-85. It remained largely in the control of the European
managing agency firms till after World War II. Its main task was to secure common action
regarding short time, pooling and limitation of output to maintain profits. There also came up
the Jute Balers Association, composed of jute balers, shippers, brokers and traders to
standardise business practices and contracts. The most influential organisation in the cotton
industry was the Bombay Mili-Owners Association; Ahmedabad also developed a strong
association. The East India Cotton Association was empowered to regulate the trade in raw
cotton which happened to be centralised at Bombay and Karachi. In the field of coal mining,
there were two associations. The larger and stronger was the Indian Mining Association,
founded in 1892 mainly by European interests, but to which only a few Indian firms became
attached. The second was the Indian Mining Federation which was largely limited to Indian
firms. The Indian Tea Association came up in 1881.

Rise and Maturation of Indian Industry in the colonial period

Life and Times of Jamsetji Tata (1839-1904)
Jamsetji Nuserwanji Tata is considered to be India’s pioneer industrialist. His main
contribution can be studied in these four areas: India’s first steel plant, hydroelectric power,
Indian Institute of Science, and the Taj Mahal Hotel. But he ventured into many more areas
and had grand visions and aspirations for India.

Contribution of the founder of the Tata group to the rising of India, industrially, can be
credited partially to the influence of his religion and community and partially to his own
traits.

Influence of his religion and community

1. Adherence to the principles of the Parsi faith: Not just their initial activities, but even
today, we can see that the Tata group functions as per the tenets of their faith: good thoughts,
good words and good deeds. This could be because of the influence of his family which was a
family of priests.

2. Doggedness and perseverance: These are the traits that helped the community survive
when they left their homeland; not giving up, and persevering in the face of adversities. Later
on Jamsetji Tata was to show these same traits when he did not give up on his dream of a
steel plant for India, and butting heads with the Viceroy of India for the Indian Institute of
Science.

His own traits

1. No end to his imagination and creativity: He envisaged development of the then marshy
areas Mumbai as cattle grazing grounds, thus taking care of the problem of mosquitoes as
well. That development did not happen in his lifetime. But later on Goregaon, a suburb of
Mumbai, which was initially a marshy area and a breeding ground of mosquitoes that would
swarm the inhabited areas of Bombay, was developed according to his plans.

[Link] to learn: Few know that the first enterprise undertaken by the Tata’s
(specifically by Jamsetji’s father Nuserwanji) was a trading firm with other partners. This
was followed by the establishment of Empress Mill in Nagpur. This mill was established and
operated along the lines of observations made by Jamshetji Tata when he spent years in
London for the trading firm. He undertook trips to Lancashire to study the textile mills there.

3. Desire to do something worthwhile for India and its people again guides the actions of
Tata group even today; a legacy of their founder.

4. Abiding passion to lift India from an agri-based subdued nation to a modern

industrialized one; a nation able to hold its own in the emerging 20th Century.
An overview of his entrepreneurial journey
1868 – Trading company

1870s – Textile Mills in Nagpur and later on Bombay. These mills were the Empress Mill
and the Swadeshi Mill respectively. Swadeshi Mill was specifically set up with the
purpose of breaking away from the dependence of the British and gain self sufficiency for
India. The produced cloth was extensively exported to China, Korea, Japan. 2 more mills
were established in the early 1900s.

1893 – Historic meeting with Swami Vivekananda where they discussed Tata’s plan to
bring a steel plant to India. Swami Vivekananda’s views on science and leadership
abilities sparked the desire in Jamsetji to start a research institute in India.

1901 – Jamsetji began organizing plans for the iron and steel company, more than 20
years after he first envisioned it while on his trips to Manchester and Lancashire for his
textile business. He also came across a British influencer who talked about the importance
of steel for a nation. On the basis of an expert’s report in the 1880s, he concluded that
the time was not right then. So he shelved the plan but did not drop it. Tata Iron and
Steel Company was established in 1907, after Jamsetji’s death, in what today is
Jamshedpur, Jharkhand. Welfare initiatives for employees like well-ventilated
workplaces, shorter working hours (then unheard of even in the west), Provident Fund,
that are mandatory today were provided by the company even then.

1903 – The Taj Mahal Hotel, Mumbai opened after the 1896 bubonic plague in Mumbai.
This was to restore the image of Bombay. In 1970s Taj Hotels Resorts and Palaces was
organized that built new properties and converted palaces into heritage hotels. In 1980, it
expanded overseas.

1906 – Plans for the Bombay area hydroelectric plant were put into motion based on the
1875 vision of Jamsetji Tata. He wanted clean, renewable energy to run the trams of
Bombay, to supply electric lighting, and to have a surplus to supply power to a few cotton
mills.

In 1910 the Tata Hydroelectric Power Supply Company was started in Maharashtra and
till 1919, 3 power plants were commissioned.

Other activities and ventures

 1. He got into land development, first by constructing houses for British officers with
amenities suitable for them. Later on he purchased properties outside of Bombay and
constructed low cost houses there to reduce the congestion in Bombay.

2. He established clubs in Bombay, including the Parsi Gymkhana. These clubs served as
platforms for political debate as well as for athletics, sports and recreational activities.

3. He believed that the way to uplift India from the shackles of poverty that the British left
it in, was to harness its’ finest minds. But he did not believe in charity and handouts. So he
established the J N Tata Endowment in 1892. Today, there are multiple trusts that have been
involved in social development.

4. Indian Institute was set up in Bangalore in 1909 with J N Tata’s personal funds. Again,
even though it came into existence after his death, he conceived the idea for this University
during his meeting with Swami Vivekananda in 1893. He faced severe resistance from Lord
Curzon who reportedly ridiculed him asking where he will find students to study in this
University. But again, he stuck to his belief of science and scientific research being the paths
to future growth and development for India...those that will help her to hold her own in the
emerging 20th Century.

Most of Jamsetji’s visions and aspirations for India were brought to fruition by his sons Sir
Dorabji Tata and Sir Ratan Tata after Jamsetji Tata’s death in 1904. But like a true founder,
he set the tone and direction for what would later on become India’s leading conglomerate –
the Tata Group.

What is his contribution to the rise and maturation of industries in India? Well, he was
observant, open to learning and in possession of a sharp intellect. He identified the key
sectors that would lead to industrial independence and self-sufficiency for India. Textiles,
Iron and Steel and Power Generation were key sectors then, are key sectors now. And he
gave India a start in this direction. He doggedly stuck to his plans when he believed in them
and did not give up easily. At times he found ways to somehow get around the British rules,
at other times he went head to head with the powers that be. But at each step, he had at heart
not personal and commercial benefits, but benefits for his country and its population.

Today the group has diversified into numerous businesses. But at the heart lie the core values
and principles shown by their founder Jamsetji Nuserwanji Tata.

(Source: Lala, Russi; For the Love of India: The life and times of Jamsetji Tata; Penguin
India; First Edition)
Case of Scindia Shipping
India had a very ancient shipping history. Evidence dates back to Mohenjo Daro days. The
histories of Mauryan dynasty, the Marathas also allude to this. Till the early 16th Century,
trade to and from India was controlled by the Arab merchants via the land route that
connected the East and the West. In 1509, Portuguese defeated the combined forces of the
Egyptians, the Sultan of Gujarat and the Zamorin of Calicut in the Battle of Diu. After Vasco
da Gama first landed in Calicut, he opened the doors for other European powers to come to
India’s shores. But Britain triumphed and Britannia started ruling the waves.

Shipping is another key sector for trade and commerce. Indian entrepreneurs did try to get
into this sector by the late 19th Century (late 1800s). Jamsetji Tata launched Tata Lines in
1890 to carry cotton and yarn between Bombay, China and Japan primarily for their textile
business. But their competitors were the British shipping companies had more wealth and
influence. The biggest player was the British-owned Peninsular & Oriental Steam Navigation
Company (P & O). Their tactics in maintaining their monopoly and more importantly,
shutting down Indian companies were such that They forced the closure of Tata Lines.

In 1906, V O Chidambaram Pillai – a nationalist, launched the Swadeshi Steam Navigation

Company in Tuticorin (South India). They continued to put up a tough fight against British
shipping companies for routes to Ceylon. But the British did not allow that. Their interest lay
in the total domination of India. The British shipping companies resorted to tactics such as
slashing of their freight rates, causing a series of ‘unfortunate accidents’, and slapping into
Swadeshi’s ships, at sea as well as port. They went so far as to getting Chidambaram Pillai
imprisoned on ‘sedition’ charges. Eventually the Swadeshi Steam Navigation Company had
to shut shop.

In 1919, Walchand Hirachand – a railway contractor and an ambitious businessman from

Kolhapur, Maharashtra, came across a ship named S S L o y al ty through his contacts among
the British officers. This ship was originally named RMS Empress of India and was used to
carry passengers along the Atlantic route.

It was purchased by Maharaja Sir Madho Rao Scindia of Gwalior who offered it for service
to the British as a hospital ship during WW I for the wounded Indian soldiers who fought for
the British.

After the end of WW, I, the ship was to be sold as surplus. Two ambitious dreamers filled
with nationalistic fervour, Seth Walchand Hirachand and Seth Narottamdas Morarjee
convinced their friends Seth Kilachand Devchand and Seth Lallubhai Samaldas to contribute
money towards the purchase of this ship.

These friends became his business partners and they all launched the Scindia Steam
Navigation Company in 1919.
Seth Hirachand used the Scindia name only to attract investors. The Maharaja and his family
had no financial or other stake in this company.

Starting a steam navigation company was an extremely risky venture. 102 Indian shipping
companies registered in 1860 and thereafter, had already gone into liquidation. British
shipping companies, the largest in the world then, were making it more and more difficult for
the Indian shipping companies to set up business and then survive.

The path of these nationalists was fraught with challenges.

Challenge 1: Right from obtaining permission for setting the venture (compulsory for non-
Britishers), Seth Walchand faced challenges. He did not give up but continued to bombard
the establishment with complaints. At around the same time, British policies in India and
back in Britain, were facing a backlash. So, as an effort to reduce heat to themselves, the
permission to buy S S Loyalty for Sir Madho Rao Scindia was granted.

Challenge 2: Converting the ship from a hospital ship to a passenger liner was the next
challenge. This refitting and refurbishment would have had to be done in London at a hefty
cost. Seth Hirachand’s plan was to undertake only minimum/preliminary changes and do a
launch and set sail for London for the refitting.

Challenge 3: Getting passengers was the next challenge. This was because of the whims and
fancies of a single gentleman. Lord Inchcape was Chairman of British India Steam
Navigation Company and the one having the strongest clout. He was furious and threatened
every shipping agent in London of withdrawing the support of his company if they booked
even a single ticket of S S Loyalty.

To this Seth Hirachand responded by placing ‘passengers wanted’ advertisements in Indian

newspapers and received overwhelming response.

Challenge 4:

But the challenges were not yet over. Seth Walchand’s next challenge was getting cargo to
fill the ship’s hold. This would have partially offset the expenses. He made personal requests
to Indian companies, including to Jamsetji Tata. But he was not met with a positive response.
Undetterd, Seth Hirachand’s purchased cement and crude iron with plans to sell it in Europe
and cover some costs.

On April 5, 1919,

S S Loyalty set sail for London. Gandhiji called on the Directors and wished them success.
On board were Indian celebrities of the time – Maharaja Hari Singh of Kashmir, Maharaja
Jagatjit Singh of Kapurthala, Prince Duleepsinghji of Jamnagar, and legal luminaries Sir
Chunilal Mehta and M C Chagla.
18 days later, the ship reached Marseilles and passengers had to disembark as the ship needed
urgent repairs. Here, Seth Walchand faced the next challenge.

Challenge 5: At Marseilles, Seth Walchand faced problems in finding agents to carry out
repairs, cleaning the ship or even unloading the cargo. With great difficulty he got these tasks
completed.

But the struggle with British shipping companies was far from over. Finally, in 1923, the
Scindia Steam Navigation Company was forced to sign a 10-year contract with British India
Steam Navigation Company, restricting Scindia to coastal trade only.

In 1923 itself,

S S Loyalty was sold for scrap as it was getting difficult to maintain her. Lord Inchcape even
offered to buy out Scindia Steam Navigation Company. But Seth Walchand chose to fight
out.

He chose to look at the enforced contract with British India Steam Navigation Company as an
opportunity. He began focusing on coastal trade and building capacity. He started buying out
smaller Indian shipping companies whose promoters were tired of standing up to the British
companies.

In 1927,

S S Jalbala their first cargo ship was launched. In 1937, Scindia Steam Navigation Company
started Hajj service to Saudi Arabia.

Post-independence, they started services to USA and Singapore. By the time Seth Walchand
died in 1953, he had had wrestled a 21% share of the Indian coastal traffic from British
shipping interests.

The Scindia Steam Navigation Company thrived in the newly independent India. But a series
of financial crises forced them to go into liquidation in the 1980s. But Seth Walchand had
already left an unforgettable legacy. The Walchand group thrived and grew by leaps and
bounds. Today, they are a well-known and well-respected group.

In 1964, the GOI declared April 5 was declared as National Maritime Day to commemorate
the historic voyage of S S Loyalty and the die-hard nationalists who fought against all odds to
make India proud.

Swadeshi enterprises in Calcutta

In 1900s, nationalists like Bal Gangadhar Tilak were not content with what they saw was the
soft approach of the Congress, towards independence. Bal Gangadhar Tilak declared that
Swaraj (self - rule, independence) was his birth right and he would have it. His declaration
found resonance with Bipin Chandra Pal from Bengal.

The Indian masses were completely at the mercy of the British. Agricultural activities were
already controlled by the British. The continued to pressure the farmers into growing cash
crops (cotton, indigo). As we saw earlier, these were exported cheaply and machine-made
British goods were imported at at high prices and sold in Indian markets. Indians had no local
options.

In 1900s, spirit of

Swadeshi continued to simmer but was not expressed explicitly (except for Punjab National
Bank founded in Punjab). This situation changed in 1905, when the Viceroy Lord Curzon
decided to divide the then-Bengal into East Bengal and West Bengal. At that time, the
Province of Bengal included Bengal, Bihar, Orissa and Assam. In his report to the British
Parliament he put forward administrative difficulties as the reason for this step. He wrote that
the Province was too unwieldy for efficient governance. But when we look at the old map of
India, we realize that what he was proposing to split Bengal on the basis of religion. What he
proposed as West Bengal had Hindu majority and East Bengal (later Bangladesh) had
Muslim majority.

This plan created deep resentment among the Bengali educated class. They decided to
respond to the Viceroy’s decision by a) boycott foreign goods, and b) patronizing swadeshi or
indigenously produced goods. They believed that this was the best way to hit Britain where it
would hurt her the most; economically.

This battle cry for swadeshi rose from Bengal but echoed through the entire length and
breadth of the land. People burnt the British-made goods and started using Indian goods. This
created additional demand for products of Indian mills. Market for the Manchester goods in
India declined. The city of Ahmedabad benefitted greatly. Between 1904 and 1910, 18 textile
companies were set up...the largest number then.

Because the swadeshi agitation began in Bengal, the impact on this province was much
greater. A number of enterprises promoted by Bengalis came into existence. For some reason,
traditional industry like cotton textile did not appeal much to the Bengalis. Their ventures
focused on more sophisticated manufacturing lines. The most important among these were:

 The Bengal Chemical and Pharmaceutical Company

 Calcutta Chemicals

 Bengal Lamps

 Calcutta (later Bengal) Pottery Works

 Oriental Match Factory

 Bande Match Factory

These were founded by nationalist-minded persons. Enterprises were also set up in the
following areas:

 Handmade paper

 Iron foundries

 Ayurvedic medicines

 Waterproof materials

 Hurricane lanterns

 Flashlight/Battery

 Pen, Pencil, Penholder, Nib

 Advertising Agencies

This was not all. Between 1912 and 1943, 886 applications for patents were made by Bengali
manufacturers14. While the swadeshi movement was responsible for re-kindling the spirit of
enterprise among the Bengali bhadralok, the demand for indigenous products sustained their
enterprises. The products from swadeshi enterprises, that were not produced in India until
then, became popular with the urban middle class. Such swadeshi enterprises were also set up
in Western India (Laxmanrao Kirloskar, Jamsetji Tata), in the South and elsewhere (primarily
banks).

India was truly throwing away the shackles of British Economic dependency.