Can we discuss Indian entrepreneurship exclusively in terms of caste and community? Can it be claimed that Indian business has broken loose of its traditional social moorings and is much more inclusive? Are caste and community affiliations still of some consequence, despite the transformed economic context? And, can we be dismissive of the weight of history in shaping the social trajectory of entrepreneurial development in contemporary India? These are key concerns we face in trying to make sense of this complex conundrum of business communities. While there are no short answers, laying bare the broader historical context could throw some light.
The rise of an indigenous entrepreneurial class in pre-independence India, despite the overbearing presence of foreign capital, is exceptional and has few parallels in the rest of the Third World. It was a product of colonial commercialisation during the 19th century. As a colonial economy, India was required to absorb the manufactured goods of Britain as well as meet the ever-growing demand for primary products from British and European industry. The development of commodity markets provided the necessary impetus for the Indian merchant class to grow and flourish.
Old-timers Traditional Marwari traders in Sadasukh Katra in Burra Bazaar, Calcutta. (Photograph by Sandipan Chatterjee)
The financing of the export trade in primary products from the hinterland to the ports in principal commodities such as opium, raw cotton and jute, oil seeds, among others—as well as the distribution of the imported manufactured goods from the ports to the hinterland—was almost exclusively in the hands of merchants from distinct business communities, at least as far as the two major nodes of trade—Bombay and Calcutta—were concerned. These communities/ castes included the Parsis, the Gujarati Banias/ Jains, the Marwaris, the Multanis or Shikarpuris of Sindh, Kutchi Bhatias and the Nattukottai Chettiars.
These communities stood out by virtue of the sheer scale of their commercial and financial operations, extending over large tracts within and outside the country. Their presence in the ‘bazaar’ economy was pronounced and critical in lubricating the wheels of commerce. The intra-caste credit and trade networks which were developed by them greatly facilitated the process of wealth generation within the community.
The ability to mobilise capital with relative ease in a situation of underdeveloped capital markets, access to market intelligence on investment opportunities, and a natural propensity for risk-bearing swung things in favour of the merchants from these traditional communities. It enabled them to move into industry with great alacrity when opportunities arose. The flow of some Parsi and Gujarati Bania capital into textiles, and the brash entry of Marwari capital into a range of consumer industries later, is illustrative of this trend.
In contrast, communities like the Chettiars and the Shikarpuris of Sindh were more conservative. They didn’t find the returns on investment in industry sufficiently alluring and chose to remain largely bankers and traders. The same applies to the Khojas and Memons, the two Muslim business communities from the Gujarat region. Ironically, after some of them shifted to Pakistan following Partition, they had a free run and ended up controlling most of their major industries well till the 1970s. But even among them, it was only a few who could effect the transition from trade to industry.
Business communities, as an organisational structure, were critical in facilitating wealth generation by the family firms in the initial phase of their growth, in a given historical context. But with the growing economic distance between family firms over time, community structures became less relevant. The rise of interest groups in the form of chambers of commerce and trade associations is a manifestation of this trend. Furthermore, these communities were not really similar in their social mores, cultural practices or even business organisations. Yet they seemed to share one common trait: a keen market sensibility.
Outside the Bombay-Ahmedabad-Calcutta axis, the entrepreneurial scenario was distinctly different. South India started its journey towards industrialisation later than western/eastern India and remained a poor cousin well till the 1970s. However, the social basis of private investment was more broad-based. The presence of merchant capitalists was not as pronounced as in the north. By choosing to move to greener pastures in the south and Southeast Asia during the late 19th and early 20th centuries as purveyors of credit, the Chettiars—the traditional business community of Tamil Nadu—ended up creating an economic environment in south India (especially in the Tamil region) that allowed other players from non-ethnic and non-commercial castes to venture into commercial enterprise. In short, there were no strict entry barriers like in north India.
First families Mittal, Premji, Birla, Mallya, India Inc big guns at a global investors meet. (Photograph by AFP, From Outlook 01 October 2012)
Significantly, commencing roughly from the 1920s, and gaining momentum after independence, sections of prosperous agriculturists/landowners (Kammas, Gounders, Reddys, Rajus, Syrian Christians, Tamil Brahmins and Goud Saraswats), upper echelons of artisanal castes (Kaikollars or Senguntha Mudaliars, Devangas) and other occupational castes from the socially marginal sections of south Indian society (Nadars, Ezhavas, Thiyyas) channelised investment into trade, organised finance and industry. Similarly, there was a movement of Patidar capital into industry and other commercial enterprises in Gujarat and of the Khatris in Punjab.
The diversified social base has not necessarily resulted in a weakening of caste and community influences. Though it may not have as much meaning as in the past, in myriad new forms it continues to play an important role in shaping the new entrepreneurial initiatives. This is particularly true at the lower and middle levels of enterprise. The recent, exceptional story of the Tiruppur garment cluster and of the ‘Gounder’ enterprise is a good example of the effectiveness of caste as a means for consolidation and weathering competition. The case of the diamond cutting and polishing industry of Surat and of the Palanpuri Jains is broadly illustrative of the same trend.
The recent rise of a nascent entrepreneurial class from the Dalit community, drawn largely from UP, Maharashtra and Punjab, and the promotion of community-based Dalit chambers of commerce reinforces the continuing importance of caste in a certain historical context. The entry of new entrepreneurs from the Marwari and Bania communities (but operating in a globally competitive market) suggests that the caste dimension operates in far more subtle ways than earlier. The benefit of being part of a traditional business community is the immense advantage in terms of networks and information flows and, above all, of the unquantifiable asset of an inherent business sensibility. The ethical dimension of trust, critically integral to any enterprise, also serves to strengthen caste structures in certain situations.
The import of the reassertion of caste in the wider social and political sphere was not lost on business. Business and politics are often intertwined and mediated through caste affiliation, with each sphere reaping not inconsequential gains from this relationship, as cases in Andhra and Tamil Nadu demonstrate so starkly. While caste and community are no longer central to the story involving large corporate houses, they remain critical to enterprises at the regional level, but in ways very different from the past. The success of certain castes in business in the past has become a beacon for others to use the same route.
(The author, a Chennai-based economic historian, can be reached at ramanmahadevan AT gmail.com)
Apropos the lead essay by Raman Mahadevan (Everyone Is A Vaishya), I enjoyed reading about the different business communities, but you could have had a section on India’s largest money-making community which draws from all castes: the politician.
Abid Siddiqui, Mumbai
I wish Mahadevan had also mentioned the homogenisation of urban and semi-urban India. It’s a huge factor in the Baniyaisation of India.
Jasjeet Shergill, on e-mail
A concise yet complete article. Congratulations.
Amrita Muttoo, Mumbai
A correction : What I meant was in fact the Twenty years from 1991 onwards. The last decade of the 20 th and the first decade of the 21 st century form our reference period of the "Post-Liberalisation ".
It was a pleasure going thro' this essay from a well-known economic historian of South India, a dear friend and an erstwhile colleague at the Centre for Developemnt Studies, Trivandrum. Greetings "Raman Garu", (as I used to address you) !
Even in pre-modern times some of the occupations such as Toddy-tapping, Pottery, Fishing, Weaving etc did involve some amount of " trading". However, scope for significant amounts of profits leading to large-scale re-investments and expansion of production base, thereby reaping both large scale economies and profits was rather limited.
In the pre-Colonial and early Colonial periods, mining and weaving had some scope for generating profits. While the technological stagnation had restricted the scope for mining and handloom weaving, scope for the rise of big emntrepreneurs from these sectors was handicapped by a heavy and aggressive competiotion from the Lancashire and Manchester-mill-made cotton textiles, leading to a kind of "de-Industrialisation" in India. The decay of handloom weaving in India is quite well known.
Thus commoditisation of traditionally made goods, taking advantage of a rising production technology, eventually leading to an Industrial Revolution was then ruled out. From 1820s onwards, India became as a dumping yard for machine-made commodities especially textiles from Europe--especially England.
If now Raman Saheb says "All are Vaishyas"-- the process appeared to have begun on a vigorous scale during the early decades of 20 th Century, when some people from the creamy layers of the non-Vaishya castes such as -- Syrian Christians, Buntus, Patels, Nadars, Gounders, Reddys and Kamma Naidus /Chaudaries in Tamil Nadu and AP----had led "Occupational Shifts ". Thus expansion of tea and rubber plantations, setting up of rice-mills, power-looms and investments in film industry had attracted the potential entrpreneous.
In the case of AP, this was made possible because of the strong moorings and foothold that the Reddys and Kammas of AP had in a stabilised and expanding agriculture under canal irrigation . Coastal (Delta) Andhra had enormously benefited by the efforts of that indefatigable and much loved Engineer-Visionary-----Sir Arthur Cotton, who was instrumental in bulildig dams (anicuts) across rivers Godavari and Krishna as early as in mid--19th century.
The "Occupationa Shifts" among some Reddys and Kammas which had begun in the Thirties and Forties of the 20 th Century in Andhra had grealy accelerated during the last two decades of the post-Liberalisation period of 21 st Century. These two communities have "Arrived" as they , in the economic and political spheres of AP.
So the moral of the story is "Occupational shift" is necessary . Let us not forget the fact that such a "Shift" had taken in Aryaavartha (the Land of Aryas ) by Vaishyas themselves long long ago . Afterall, in the initial three-fold "Varnashrama Dharma" the ordained occupation for the Viashyas was NOT Trade but CULTIVATION. Thus, the Vaishyas led the other communities in matters of "Occupational Shifts " both in Vedic and Modern times !!
(1) With my limited interaction with people from business communities, I have some observations to make. (2) In our country it is not possible to earn good money or even survive in business without an ability to manage those who are in government administration. Successful business communities in all the states have one common trait: people from these communities are always confident of managing government officials in a very clever manner. Most of them also believe that it is not possible to do any business without saving taxes: be it indirect taxes like excise duty, octroi, sales tax or VAT or income tax. (3) Ethics of business is entirely different than what children from families in typical non-business communities learn while growing up. In almost all such families (who are never in business) children are taught to abide by law. When such children grow up and face the enterprising world of business with full of intrigue, strategies and what not, they are simply unable to come to terms with such life. They (such ‘grown up children’) can never be good businessmen, nor can they be obedient employees of in any business house because an obedient employee would have to first unlearn the childhood lessons.
Enjoyed reading about the different business communities, but you could have include a section on the largest money making community in India who come from all castes and creeds in India--The Politician!
Aditya Mukherjee >> If I am not wrong, there are many Hindu marriages, and perhaps one type of marriage is solomnised by a Priest.
Indeed right. When it comes to essential ceremonies of Hinduism - Marriage and Death, priest directed ceremonies were recommended but were not the only ones recognized , even in Vedic Era. That , more than anything distinguishes Hinduism from the Semetic religions - Hinduism did always suggest the preferred way of doing ceremonies (seven steps around fire) but also gave room for alternatives as well as modifications in the preferred way (based on localization). This was not and never the case in monotheistic religions.
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