The history of corporate India or Indian business in general has not received the amount of attention and interest that it legitimately deserves. Rightly, the focus of research in Indian economic history has been on other weightier issues and subjects. Nevertheless, it can be justifiably argued that the evolution of private business in our country, the various challenges it faced, its successes and reverses, not to mention the various opportunities that came its way in the last two centuries, should be highly interesting for academics and analysts.

There have, indeed, been some highly insightful and landmark studies by Indian scholars in the broad area of business history and the evolution of business organisations. The late Tapan Raycahudhuri’s pathbreaking research on the history of the Dutch East Indies Company and how it influenced colonial expansion and trade (Jan Company in Coromandel, 1605-1690) published in 1962 is still considered a benchmark. The noted scholar, according to reliable sources, studied Dutch diligently before he embarked on this study. There were others, too, who did commendable work — these included P.S. Lokanathan in 1935 (Industrial Organisation in India) and the more perceptive and better-researched study by Amiya Bagchi in 1972 (Private Investment in India 1900-1939).

Omkar Goswami has had the benefit of access to these pioneering efforts and he understandably draws upon this extensive body of work. However, his target audience and readership are different. He clearly aims for the general market and his output should be judged accordingly.

One of the most interesting facets of this book is the pivotal role played in the history of Indian business and commerce by a Tagore family scion, Dwarkanath, grandfather of Rabindranath. Goswami, rightly, does not conceal his admiration for this amazing polymath and polyglot, who set up one of the first Managing Agency ((MA) organisations, Carr, Tagore and Company (CTC) way back in 1834. Like the other members of the wealthy Bengali bhadralok clan, the Tagores could hold their own in the company of all the sahibs they came across. They were just that much more cultured and urbane, and were propped up by sizable family fortunes from their zamindaris and real estate spread all over Bengal.

Drawing from the classic work of the American scholar Blair King published in 1972 (Partner in Empire: Dwarkanath Tagore and the Age of Enterprise in Eastern India), Goswami devotes one whole chapter to Dwarkanath and the activities of CTC. This is one of the riveting segments in the book and relates with empathy the meteoric rise, reign and decline of this iconic figure and his business empire. The indigo crisis of 1840 was partly to blame for Dwarkanath’s precipitate fall from glory; so was his ill-fated venture into banking (Union Bank) and its misdirected foray into financing the indigo trade.

The book diligently sketches the multi-faceted character and talents of a person who designed, implemented and financed a business framework that lasted for more than a century and a half. His philanthropy was so legendary that Indians as well as Europeans called him “Raja” or “Prince Dwarkanath”.

It must not be forgotten that the man was a resolute opponent of the sati system, while making sure he stayed close to his ancient cultural roots, even as he embraced the best that the West had to offer.

Fast forward to the late 1870s and the years that followed till Independence. These seven to eight decades saw the growth of Indian private business and its institutionalisation. The MA system was at the centre of it all. The author now enlarges his canvas to cover the growth of corporate India in the western and southern parts of the country. There is a wealth of secondary data that is presented here on the growth of the MA system and the steadily increasing influence of indigenous Indian business groups. In Calcutta and Bengal, these were, of course, the Marwaris, but in Bombay and western India, the primary business communities were the Gujaratis, Parsis, Bhatias, Kutchi Memons and others. In South India, the pace of industrialisation was slower and so was the involvement of Indian families, apart from lone operators like some Chettiars and the Kamma Naidus.

Post 1947, the scenario became much more interesting. The end of Pax Britannica did not lead to a panic exodus of British capital from the country, unlike in some former colonies of other European imperialist powers. Despite the creeping “Indianisation” of large business houses, especially in Calcutta, the organisations maintained their façade. In tea, jute, trading and manufacturing, the publicly listed companies controlled by British MAs continued to prosper. There were persistent market reports that some of the old British companies had entered into sub rosa deals with large Marwari business groups to sell out their stakes. In those days, the Indian state did not have its long arms to investigate these reports.

However, the winds of change were blowing through the corporate corridors in the country. The fallout of the Mundhra episode and the Dalmia-Jain affairs led to various legislative changes and policy initiatives. The Companies Act of 1956 clearly indicated that the MA system had a very limited future, because one of the stated objectives mentioned in the legislation was the “progressive elimination of the Managing Agency system”.

In 1966, the MA system was abolished for companies in the cement, sugar, paper, cotton and jute industries. In April 1970, the system was completely done away with. The days of the “boxwallahs”, the half-derogatory Calcutta term for executives in large companies that were once British-controlled, were over. Corporate India had been compelled to adopt the structure that prevailed in all capitalist/market-driven countries.

Truth be told, the sahibs were on the back foot ever since the Nehruvian “socialist” policies had started in the early 1950s. Industrial licensing, import and foreign exchange controls, controls over public issues of capital etc. were totally alien to the expatriate executives who were sent out to India. This is despite the fact that Britain itself had some of these controls (particularly in foreign exchange) after the last war and well into the 1950s.

The real problem lay with the quality of the expatriates who were sent out to India to man the desi subsidiaries. Goswami has a passing reference to this issue but does not dwell on it. Veterans who spent their salad days in corporate Calcutta till the 1970s have numerous anecdotes on this subject. This writer remembers the wisecracks going around the corridors of Grindlays Bank (where he was a wet-behind-the-ears investment banker) about an old sahib who was returning to Britain prior to his retirement. The average IQ of both India and the UK would increase with his return to Old Blighty, was what we youngsters quipped.

There is another segment in the book that should be of considerable interest to economic historians. This deals with the business enterprises that were launched by Bengali nationalist entrepreneurs. These companies were often high-tech enterprises that were set up with true idealistic motives. In many cases, their technology was sourced from continental Europe, since the UK could hardly be expected to sell its family silver to its own colony. These indigenous innovating organisations were invariably short of capital and funding; the large British companies ruthlessly stamped on these minnows and tried their best to derail them.

While Bengali-owned pioneering enterprises set up by nationalists led a hand-to-mouth existence, Indian entrepreneurs and businessmen in west and south India did very much better. Indeed, these regions of the country saw a true flowering of indigenous corporate entities.

Goswami mentions that the share of manufacturing in India’s GDP rose from 2 per cent in 1900-01 to 8.9 per cent in 1946-47, which is a stellar performance by any standards. Unfortunately, this all-India data does not have a state break-up or a regional break-up, but there would be sufficient grounds for believing that most of the growth came from western India.

The rise of the western metropolis Bombay, and the related phenomenon of the growth of the western Indian communities like the Gujaratis, Parsis, Bhatias, among others, can also be attributed to the more egalitarian distribution of land, rural wealth and resources in that part of the country. This was because of the ryotwari settlements in the western provinces, as opposed to the pyramidal zamindari structure in eastern India.

After 1950, south Indian business and industry began to prosper. The business enterprises of the Chettiars, the Iyengars and other families started growing and soon Madras became the third Indian business metropolis. However, south Indian companies really took off from the early 1960s.

Goswami has a very interesting segment in the book on the role of the long-term development financial institutions (all of them government-owned or controlled) in the whole saga. He elucidates how availability of concessional long-term debt finance helped Indian-owned business enterprises to grow exponentially. The old advantage of the MAs of having the ability to raise capital evaporated—Indian business houses were better equipped and placed to tap this attractive and large source of funds.

To add to it all, the old second city of the Empire had a number of very innovative, far-sighted and affluent Marwari families who specialised in the takeover of the old sahib companies. This part of Goswami’s work has a delightfully nostalgic memorabilia of the Calcutta that people of this writer’s generation knew. It was certainly an artificial construct—colonial clubs, huge mansions, fabulous restaurants and islands of enormous wealth amidst a sea of appalling poverty and squalor. The old Empah was dead by the late 1960s and along with it a host of companies that were once household names.

Goswami is frank enough to mention, in passing, the poor judgement of the sahibs in choosing Indian successors who were most unworthy and venal. Without being parochial, and at the risk of provoking the ire of my in-laws, I must state that some of the most notorious corporate executives in Calcutta in the early 1960s till the early 1970s, responsible for destroying many of the city’s corporate jewels, were folks from the northern and north-western parts of the country, fresh from Doon School, Sanawar etc., armed only with their Senior Cambridge certificates.

This book cries out for a more rigorous and analytical follow-up. But that would mean a specialised and different audience.

For the general reader, this is an eye-opener and an interesting read, for which Omkar Goswami can take a bow.

Without meaning to quibble, I have to add a few caveats. Poor proof-reading in a number of places changes dates in the text from the 19 century to the 20th. There are some needless errors of fact.

The main founder of Calcutta Chemicals, Professor R.N. Sen, a renowned chemistry teacher in Presidency College, Calcutta, is omitted from the list of promoters of the company, and B.N. Elias (of B.N.Elias & Co.) is categorised as an Armenian, whereas the Eliases were as kosher as any Jewish family in the whole world.

Omkar Goswami

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