Indian commerce over the last 75 years since Independence
When we trace the evolution of Indian commerce, certain firms and individuals have played seminal roles in shaping this trajectory.
At the time of India’s economic liberalization in 1991, the Reliance group was already one of India’s leading conglomerates, and it has solidified this position ever since.
The growth of Reliance attests to the mercantile element in Indian capitalism. When Dhirubhai Ambani returned from Aden in Yemen in the late 1950s to set up a textile mill in India, not many had expected him to re-write the game’s rules. The Indian business landscape, then dominated by the Parsi and Marwari families, didn’t notice. Only when Ambani listed his company in 1977 — Reliance Industries, now one of India’s most prominent companies in terms of revenue — did the local businesses notice the man. Thereon, Ambani and his son, Mukesh, have been instrumental in reshaping Indian trade and commerce, and his legacy lives on even after his passing.
Tata’s 150 years of existence have been synonymous with the history of the Indian industry. And there is only one reason it continues to be as relevant. After independence, the group’s growth story took several twists and turns; it involved diversification, growth, competition, productivity enhancements, efficiency gains, globalization, and overall innovation.
The next wave of expansion was led by Ratan Tata, who headed the group after his uncle JRD stepped down in 1991. Ratan Tata spent the first years consolidating a decentralized structure. He made the group’s companies more efficient internally and then focused on global expansion. By the time Ratan Tata retired on his 75th birthday on December 28th, 2012, he had been head of the Tata group for 21 years. During Tata’s tenure, the group’s revenue grew to around ₹ 4.76 trillion in 2011-12 from ₹ 14,000 crores in 1991.
Currently, the Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products, and chemicals. Tata companies have operations in over 100 countries across six continents and export products and services to upwards of 150 countries.
Larsen & Toubro completed 75 years in the construction and mining machinery business (CMB) in 2021, one of its oldest business verticals. It has supplied over 60,000 units of various industrial equipment in the country during its 75 years and has significantly contributed to the nation’s growing infrastructure. L&T has an enduring legacy of pioneering critical equipment needed for nation-building and has been a leader in the domain of developing engineering design and manufacturing capabilities for decades.
AM Naik has nurtured human capital, prioritized skill training, and utilized I.T. as an enabler across L&T’s businesses throughout his tenure as Chairman.
Infosys was founded by N.R. Narayana Murthy, Nandan Nilekani, S.D. Shibulal, Kris Gopalakrishnan, Ashok Arora, N.S. Raghavan and K. Dinesh started the company with a meager amount of INR 10,000 in 1981. It started trading in India in 1993. This was possible because the business could increase the per-capita revenues and attract the brightest investments on a go-forward basis owing to its robust product portfolio with leading capabilities in about 30 areas across cloud, data, analytics, A.I., automation, cybersecurity, and IoT.
Azim Premji has headed Wipro since the late 1960s. He turned what was then a $2-million hydrogenated cooking fat company into an I.T., BPO, and R&D services organization generating close to $8.5 billion in revenue, with a presence in 58 countries. Other Wipro companies led by Premji have generated revenues close to $2 billion and span sectors like consumer goods, precision engineering, and health care systems. In 2001, he set up the Azim Premji Foundation, a not-for-profit organization focused on strengthening India’s public school system. It was reported that Premji donated Rs 9,713 crore to retain his top ranking among Indian philanthropists in FY21.
Another landmark event that revolutionized Indian commerce and propelled many industries to succeed was the introduction of the Goods and Services Tax, or GST, an indirect tax regime used in India to supply goods and services. GST came into effect on July 1st, 2017, through the implementation of the One Hundred and First Amendments of the Constitution of India by the Government of India. It replaced multiple existing taxes levied by the central and state governments.
GST has brought in a ‘one nation, one tax system, it is a comprehensive, destination-based, multistage tax, and it has successfully subsumed almost all the indirect taxes except a few state taxes. It has improved competitiveness and performance in India’s manufacturing sector.
GST is levied at every stage of manufacturing and sales of goods and services nationwide. This tax is also levied when goods or services are consumed.
With GST, the taxation system has been simplified. With this tax, the buyer has clarity on the tax payable while purchasing. This is crucial when considering GST and its impact on the overall GDP.
Upon evaluating GST and its impact on the Indian economy, customs duty on exporting goods has also reduced. So now industries save money while producing goods and shipping them. This two-way savings has helped many production units to export their goods overseas, increasing the export quantity.
Lastly, with GST, taxes of the State and Central governments have merged. This has removed the cascading effect of taxes, further reducing the burden on the buyer and the seller.
Generally speaking – over the last 75 years, new service sectors such as Information Technology and telecommunications have also transformed the landscape by creating new domains such as e-commerce and startups.
India’s path to digital transformation was carved by important Government initiatives that led to new digital platforms for the citizens and uniformly improved access to such platforms. Aadhar was the most significant achievement, covering 99% of the Indian population and allowing citizens access to important government digital services. Not only did this improve the overall availability and transparency of social payments, but it also helped provide timely and effective financial assistance to those in need.
Notably, with digital payments, people don’t actually need cash or cheques to carry out transactions. This has accelerated the use of contactless payments, debit cards, credit cards, and mobile wallets on e-commerce platforms. Gradually, eCommerce supported by electronic payments is gaining popularity among the masses, and it is widely accepted as the favorable mode of payment across the board.
An offshoot of this, UPI has accelerated India’s shift to e-payments, particularly for money transfers between individual parties. According to recent reports, India had 9.36 billion transactions totaling Rs 10.2 trillion in the first quarter of 2022. As every transaction is documented and recorded in databases, the likelihood of cash loss and other fraudulent activity is decreased, making it a very reliable option to transact for the various stakeholders within the e-commerce sector.
Additionally, the Open Network for Digital Commerce is a recent initiative that aims to democratize and integrate Digital Commerce, migrating it from a platform-centric model to an open network. ONDC will eventually enable local buyers and sellers to be digitally visible and transact through an open network, irrespective of the platform/application they use. Moreover, the aim is to help small local buyers and sellers to create a niche identity on the e-platform and conduct their business.
ONDC will also empower merchants and consumers by breaking silos to form a single uniform network to drive innovation and transform all businesses, including retail goods and food, to mobility, among others. ONDC is anticipated to digitize the entire supply chain, standardize operations, facilitate logistics, and generate consumer value.
Notably, the government’s goal of democratizing ecommerce in India gave rise to ONDC. A large client base can be catered to without enrolling on several sites. All online firms will benefit from increased visibility and equitable access to growth prospects which is a great leap forward for the Indian e-commerce sector.