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Transnational Indian Business in the Twentieth Century

Published online by Cambridge University Press:  12 December 2017

Chinmay Tumbe
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Abstract

This article argues that migration and investment from India moved in tandem to chart the evolution of transnational Indian business in the twentieth century, first toward Southeast Asia and Africa and later toward the United States, Europe, and West Asia. With a focus on the banking and diamond sectors, the overseas investment project of the Aditya Birla Group, and the transnational linkages of India's one hundred richest business leaders, the article locates important events, policies, and actors before economic liberalization in 1991 that laid the foundation for subsequent globalization of Indian firms.

Keywords

migrationinvestmenttransnationalIndiaBirladiamondbanking
Type
Research Article
Information
Business History Review , Volume 91 , Issue 4 , Winter 2017 , pp. 651 - 679
Copyright
Copyright © The President and Fellows of Harvard College 2017 

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References

1 Even though various reforms were initiated in the 1980s, 1991 is the conventional date marking the wide set of reforms on economic liberalization in India, including a new industrial policy enabling greater foreign investment and trade.

2 Reserve Bank of India, Handbook of Statistics on the Indian Economy, 2015–16 (Mumbai, 2016)Google Scholar. The figures in colonial India were in the range of 1 to 2 percent of national income and the figure was close to zero in the period from 1950 to 1991. Roy, Tirthankar, India in the World Economy: From Antiquity to the Present (New Delhi, 2012), 239 CrossRefGoogle Scholar.

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23 Ibid., table 2.

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27 These migrations were also preceded by migrations for education and citizenship to the United Kingdom in the 1950s and 1960s. See Oonk, Settled Strangers.

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29 State Bank of India (SBI), India's largest lending bank, expanded rapidly overseas after 1991. In 1967, it had overseas offices only in London and Colombo (SBI, 1967 Annual Report, 18). In 1982, the Export-Import (EXIM) Bank of India was set up to deal extensively with international trading operations.

30 Information on the Indian Overseas Bank is sourced from “Building a Bank, the MCt. Way,” The Hindu, 12 Apr. 2004; company annual reports; and the Indian Overseas Bank website celebrating the bank's seventy-fifth anniversary in 2011–2012.

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37 “Kirtilal M. Mehta, 86; Built a Gem Company,” obituary, New York Times, 23 July 1993, http://www.nytimes.com/1993/07/23/obituaries/kirtilal-m-mehta-86-built-a-gem-company.html.

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45 The Tatas had representative offices overseas but no major joint ventures outside India before 1970. This section is based on Merchant, Aditya Vikram Birla.

46 Ibid., 258.

47 Ibid., 146.

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49 Examples of firms include those from the Birla group (Indo Bharat Rayon, Elegant Textile), Indo Rama Synthetics, Ispat, Jay Kay Files, Air India, State Bank of India, Bank of India, Engineering Export Promotion Council India, and Godrej, among others. See Sandhu and Mani, Indian Communities, tables 4.1, 4.3.

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55 Ibid., 19.

56 J. R. D. Tata founded Air India International, Asia's first international airline, in 1948; however, it was nationalized in 1953 by the Nehru government. Tata's international engagement came primarily through Tata Engineering and Locomotive Company (TELCO, now Tata Motors), Tata Consultancy Services (TCS), and Tata Exports.

57 For a useful summary of major Indian firms investing overseas, see S. Lall, “Emergence of Third World Multinationals.”

58 Karanjia, B. K., Godrej: A Hundred Years, 1897–1997, vol. 2 (New Delhi, 1997)Google Scholar. A large fraction of workers employed at Godrej's Malaysian factory were women (see Figure 3). One manager who worked in Malaysia, Mr. Thanewalla, recounted the common stereotype at that time that women were more effective workers than men. Mr. Thanewalla, interview, 10 Feb. 2006, Oral History Collection, Godrej Archives, Mumbai.

59 For the names of over fifty firms participating in such technology exports—including PSUs such as BHEL, SAIL, HMT, and ITI—see S. Lall, “Emergence of Third World Multinationals,” esp. appendices.

60 EXIM Bank, “Outward Direct Investment from India: Trends, Objectives and Policy Perspectives” (Occasional Paper No. 165, Mumbai, 2014).

61 Ibid., 16.

62 Ibid., 15.

63 This section relies extensively on corporate histories drawn from biographies, company websites, and business magazines.

64 They were Mukesh Ambani (Reliance), Dilip Shangvi (Sun Pharma), Azim Premji (Wipro), Pallonji Mistry (stakes in Tata group), Lakshmi Mittal (Arcelor Mittal), Hinduja Brothers (Ashok Leyland), Shiv Nadar (HCL), Godrej, and Kumar Birla.

65 For a discussion on business groups, see Tripathi, Dwijendra and Jumani, Jyoti, The Concise Oxford History of Indian Business (New Delhi, 2007)Google Scholar; for research on the “new capitalists” of India, see Damodaran, Harish, India's New Capitalists: Caste, Business, and Industry in a Modern Nation (Delhi, 2008)Google Scholar.

66 The case of Kiran Mazumdar-Shaw was discussed in an earlier section.

67 Wipro was founded as Western India Vegetable Products Limited in 1945 in Mumbai.

68 Buhari Syed Abdur Rahman (1927–2015) does not feature on the Forbes list but created a large business empire (Emirates Trading Agency, or ETA) with diversified interests in West Asia and India. Born in Tamil Nadu, he worked in Sri Lanka and Hong Kong in the diamond business before moving to Dubai in the 1970s.

69 Upadhya, Carol, “A New Transnational Capitalist Class? Capital Flows, Business Networks and Entrepreneurs in the Indian Software Industry,” Economic and Political Weekly 39, no. 48 (2004): 5141–51Google Scholar.

70 Of the top one hundred Indian companies by net sales in 2014, around 70 percent are private companies and 55 percent are family-owned private companies (author's estimates). There is close congruence between these companies and the names on the Forbes 100 rich list.