18-03-2014, 11:26 AM
Indian entrepreneurs
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INTRODUCTION
Today, many more Indian entrepreneurs are emerging in the business world. Astonishingly enough, they are quite different from when they first appeared over twenty years ago. In the 1980s, the Indian economy was greatly bogged down by an atrocious socialistic ideology, whereby a rigid license raj and corrupt bureaucratic control was how businesses were conducted.
It began when Jawaharlal Nehru, India's first Prime Minister, wanted to tailor the Indian economy after the Soviet Union's socialistic economic structure. In his mind, he strongly believed that the state should control every aspect of the Indian economy, and thus, a planned economic growth could be achieved. His idea revolved around issuing licenses to a worthy few who were selected based on their credentials and the existing market economies of operation. Although Nehru had good intentions, the way he executed his plan proved to be counterproductive.
Nehru strongly believed that entrepreneurs should focus their efforts on nation building rather than selling products or competing with each other, because he felt that it did not directly contribute to this cause. To ensure that the concept of nation building was properly enforced by all business owners, Nehru made sure that every entrepreneur received a "certified nation building" license from the relevant license officer. He also put forth a rule stating that only two to three companies could be granted a license within the same industry, greatly limiting the possibility of establishing competition.
In addition, Nehru wanted industries to be located all over India, rather than be positioned at select industrial hubs, a strategy which he theorized would ensure a balanced industrial growth. Therefore, he passed laws requiring entrepreneurs to obtain a location permit (license) prior to the start of their company. In order to avoid capitalistic monopolies, Nehru stated that companies should obtain licenses to expand their production capacity. To prevent money laundering within companies, another major issue, Nehru made it mandatory for the excise and licensing officials to visit and audit every company each year in order to ensure quality assurance. All of these strict regulations had their problems as well. Not only did every entrepreneur need to obtain multiple licenses but the government officers who were in charge of overseeing all licensing aspects were underpaid and eventually resorted to bribery and corruption. This led to entrepreneurs paying bribes in order to acquire the necessary licenses.
Situations got so precarious that even business owners had to obtain a government license just to meet with foreign business delegates in other countries. During those times, entrepreneurs flocked around ideas that mostly involved cornering manufacturing or importing licenses. This sort of business environment offered absolutely no incentive to invest time in technical innovation to reduce manufacturing costs or even offer better quality products and services since one could get far higher results by influencing the customs or excise officer to classify a product under a category that attracted a lower rate of duty.
During this license raj, most highly qualified young Indian graduates had no family connections nor were interested in influencing excise officers. Therefore, many of them immigrated to the United States to avoid such red tape and to gain economic freedom. Realizing that the existing economy was in dire crisis, Indian business practices began changing for the better in 1991 after extensive economic reforms. By ridding the old socialistic license raj system, Indian entrepreneurs no longer needed to worry about excise officers in order to achieve their business goals. This encouraged them to start focusing on expanding their markets and acquiring more customers
Rapid economic growth has resulted since the removal of the license raj. For instance, the Indian economy has sustained an average growth rate of over 6% annually, with the gross domestic product or GDP being around 9.2 % between 2006 and 2007. In the past decade, India's GDP has also arisen from 21 % to 33 %, and India's foreign exchange reserves have reached over $200 billion.
1| Dhirubhai Ambani (28 December 1932 - 6 July 2002)
Dhirubhai Ambani is the most famous businessman of India. Ask even a 5 year old in India, and he/she will know about Dhirubhai Ambani or atleast about his last name. In all his life, he learnt and applied. From his student life in dusty lanes of a small village in Gujarat to the major seaport city of Aden and finally in Bombay where he become the doyen of the Indian industry. All his life he had been doing only one thing and that is to learn and apply.
After doing his matriculation; though he wanted to continue study, Dhirubhai went to Aden, Yemen to earn money as his home's financial condition was not good. In Aden he worked with a trading firm as a clerk. In those days, Aden was the second-most busiest port in the world, and traders from across the world came there for business. He learnt the ins and outs of trading, read every thing that he could lay his hands on.
While the British Raj was ending in Yemen, many Indian expatriates went either to Britain in search of better life or came back in India. Dhirubhai choose the latter and started his business; first an import-export firm, then Reliance Industries and after years of hard work his dream to make the world's largest oil refinery of the world was completed in 1999 Jamnagar, Gujarat.
Undoubtedly, he is the most famous Indian businessman of all time.
2| Ghanshyam Das Birla (April 10, 1894 - June 11, 1983)
G.D Birla is the founder of the Aditya Birla group, now a multinational conglomerate having its base in Mumbai. Ghanshyamdas left the traditional business (to lend money on hocked items) of his family and went to Bombay (now Mumbai) to start dealership in cotton. His venture was successful.
Further in the years to come he diversified in various other industries. He started a paper mill, a sugar factory, then a car factory, and also expanded his business in to cement, steel and also started a commercial bank now known as United Commercial Bank which is still operational by the name of UCO Bank.
Now Aditya Birla group operates in more than 33 countries and employs over 133,000 with an annual turnover of USD 35 billion.