HISTORY OF

COMMERCE IN
INDIA
•Ancient India was far ahead
in Industrial Production
•India – No.1 Country in trade,
commerce and manufacturing
 Trade and commerce have played a vital
role in making India as a major actor in the
economic word in ancient times
 Commercial cities like Harappa and
Mohenjodaro were some examples for the
business development of ancient India
These civilizations had established commercial
connections with Mesopotamia and traded in
gold, silver, copper, gemstones, beads,
pearls,sea shells etc.
Mesopotamian Civilisation
Iraq, Kuwait, Iran and Syria
History of Trade and Commerce

There were different types of coins and

weighing practices during that time
• Hindu business community was
known for its entrepreneurship
and trustworthiness
• The variety and quality of
goods produced in India were
exclusive and not available
anywhere else.
• Knowledge of sea routes,
monsoon winds and
navigational aspects helped
them to sail to distant places
  Traditionally – Vaisyas
 Other communities started
emerging – Parsis, Banias
and Marwaris in Bombay
region,
TRADING  Lingayaths in Karnataka
COMMUNITIES
 Chettis and Komatis in
Madras
 Khatris in Punjab
 Marwaris in Bengal and
Assam
 River routes promoted trade
Development in Banking system
Rise in Intermediaries and Better
transportation system helped
commerce to develop further and
promoted business with outside world
 An indigenous banker
is any individual or
Indigenous private firm receiving
Banking deposits and dealing in
Systems Hundies or lending
money
 Indigenous Banking System

As economic life progress, metallic money had been

introduced which in turn accelerated the economic
activities

Documents such as Hundi and Chitti were in use for

carrying out transactions in which money passed from
hand to hand
 Indigenous Banking System

Hundi as an instrument of exchange, it involved a

contract which warrant the payment of money,
the promise or order which is unconditional and
capable of change through transfer by valid
negotiation
 The commerce in Ancient India
was financed by Indigenous
banking systems.
 Till 19th century indigenous
financial agencies constituted
the bulk of the Indian financial
system.
 They provided credit not only to
traders and producers but also
to the governments of the day
 Indigenous banking is a business inherited from
great grandfathers, managed in traditional style
for hundreds of years
 Function independently
 Confine their business to specific caste and
communities
 Bankers established associations to protect their
common interest
 Eg: Chamber of commerce in Mumbai
  Operating mainly in rural areas
 Maintain branches in important
towns and cities and are
managed by their agents called
Characteristics gumastas.
of Indigenous  Borrow funds by accepting
Bankers deposits from the people
 Provide credit facilities flexibly
against security of land,
jewellery,etc
  Provide Loans to small
traders and industrialists
who cannot offer security
to commercial banks
Characteristics  Provide remittance
of Indigenous facilities to their clients
Bankers
 They draw and discount
bills (known as hundies )
for their customers
 Hundies practiced by Indian Merchant Communities

Name of Hundi Category Function

Payable to any persons – no liability over

Dhani-jog who received the payment

Payable to a specific person (someone

Sah-jog Darshani respectable). Liability over who
received the payment.

Firman-jog Payable to order

Dekhan-har Payable to the presented or bearer.

Payable to any person – no liability over who

Dhani-jog received the payment, but payment over a
fixed term.
Firman-jog Muddati Payable to order following a fixed term.
Drawn against dispatched goods. If goods lost
Jokhmi in transit, the drawer or holder bears the
 Rise of Intermediaries

Intermediaries played an important role n the

promotion of trade. They helped the producers
especially in foreign trade.

They consist of commission agents, brokers and

distributors for wholesale and retail of goods.
 Transport

Land Transport and Water Transport were popular in

ancient times

Roads as a means of transportation had assumed

key importance in the process of growth especially
in inland trade
Eg: The northern trade route from Bengal to Taxila
 Transport

Maritime trade was another important branch of

global trade network

Muziris (ancient harbor) in Malabar Coast (near to

the present-day Cochin) has a long history of
international maritime trade
 Transport

Calicut was also an important market for Chinese to

acquire items like frankincense, pepper (black gold),
pearls, cotton etc.

Pulicat on Coromandel Coast (Tamil Nadu) was a major

port in the 17th century
Textiles were the principal export item from Pulicat to
Southeast Asia
 Merchant Corporations

They were autonomous corporations (guilds) formed

to protect the interests of the traders

These corporations were organised on formal basis,

framed their own rules and code of conduct, which
even kings were supposed to accept and respect
 Merchant Corporations
The guild chief directly dealt with the king or tax
collectors and settled the market toll (tax) on behalf
of its fellow merchants at a fixed sum of money
Major Trade Centres
 Major Trade Centres
1

Pataliputra
Patna in Bihar today
Commercial town and major centre for export
of stones
 Major Trade Centres
2
Peshawar City in Pakistan
Very popular for export of wool and for the
import of horses. Major transactions between
India, China and Rome in the first century
3
Taxila
City in Pakistan, also called Thakshashila
Popularly known as the city of financial and
commercial banks
 Major Trade Centres
4
Indraprastha
Located in the region of present-day New
Delhi
It was a commercial junction where most
routes leading the east, west, south and north
converged (joined)
 Major Trade Centres
5
Mathura City in UP
It was an emporium of trade and people here
subsisted (lived) on commerce

Many routes from South India touched Mathura

and Broach (Bharuch in Gujarat)
 Major Trade Centres
6
Varanasi City in UP
Well known centre for textile industries and
became famous for gold silk cloth and
sandalwood workmanship

It had links with Taxila and Bharuch

 Major Trade Centres
7
Mithila City in Bihar
The traders in this city crossed the seas by boats,
through Bay of Bangal to the South China

They established trading colonies in South China

 Major Trade Centres
8
Ujjain City in MP
Different varieties of clothes were exported
to different centres.

It had trade connections with Taxila and Peshawar.

 Major Trade Centres
9
Surat City in Gujarat
It was an emporium of western trade during
Mughal period

They were also famous for gold border sarees

 Major Trade Centres
10
Kanchi
Present day Kanchipuram in Tamil Nadu
Chinese came here to purchase pearls, glass and
rare stones and in return they sold gold and silk
11 Major Trade Centres
Madura City in Tamil Nadu
It was the capital city of Pandya dynasty who
controlled the trade of pearl and fisheries of the Gulf
of Mannar (shallow in between India and Sri Lanka)
 Major Trade Centres
12
Broach
Present day Bharuch in Gujarat
It was a major trade centre in Western India
 Major Trade Centres
13
Kaveripatta
Present day Kaveripattanam in Tamil Nadu
It was scientific in its construction as a city and
provided loading, unloading and strong facilities of
merchandise

It was also famous for perfumes, cosmetics,

scents, silk, wool, cotton and also for ship building
 Major Trade Centres
14
Tamralipti
City in West Bengal (Kolkata)
It was one of the greatest ports connected
both by sea and land

It was linked by road to Banaras (UP) and Taxila

 Major Exports and Imports

Export Items:
Spices, wheat, sugar, indigo, opium, sesame
oil, cotton, parrot, live animals and animal
products etc.

Spices
 Major Exports and Imports
Import Items:
Horses, animal products, Chinese silks, linen,
wine, gold, silver, copper, etc.

Chinese silks
(1AD to 1991)

Position of Indian
Subcontinent in
World Economy
 India in World Economy

From 1st to 7th centuries, India was estimated to

have the largest economy in the world
The country was often referred as ‘Swarnabhumi’
and ‘Swarnadweep’ by many writers and travelers
like Megasthenes, Faxian (Fa Hien), Xuanzang
(Huen Tsang) etc. because of its prosperity
 India in World Economy

During 18th century, the British empire began to

take roots in India, thereby the Indian economic
condition was slowly changed from being an
exporter of processed goods to the exporter of raw
materials and buyer of manufactured goods
India begins to
Reindustrialise
 India begins to Reindustrialise

After independence, the process of rebuilding the

Indian economy have been started
As a part of this the first five year plan was
implemented in 1952.

5 Year Plan
 India begins to Reindustrialise

Due importance was given to the establishment of

modern industries, modern technological and
scientific institutes, space and nuclear programs
 India begins to Reindustrialise

To overcome the problems of lack of capital, rise in

population, huge expenditure on defence,
inadequate infrastructure etc. India relied heavily on
borrowings from foreign sources and finally, agreed
to economic liberalization in 1991

Liberalization
 India begins to Reindustrialise
The Indian economy is one of the fastest
growing economies in the world today
The high growth sectors have been identified,
which are likely to grow at a rapid pace
 India begins to Reindustrialise

The recent initiatives of the Government of India

such as ‘Make in India’, ‘Skill India’, ‘Digital India’,
Foreign Trade Policy 2015-20 etc. is expected to
help the economy in terms of exports and imports
and trade balance
Introduction-
Human Activities
Human Activities

 An activity is a symbol of life and is necessary to satisfy

human needs and wants for
 Survival,
 Standard of living,
 Social status and Social obligations
 Activity performed by a human being to meet his/her
needs and wants or may be for personal satisfaction.
 Human Activities

Economic Activities Non-Economic Activities

 Earning money or financial gain  Satisfaction of sentimental or emotional
is the main objective need is the main objective
 Related to production,  Influenced by love, sympathy, emotions,
exchange, distribution and etc.
consumption of goods and  Undertaken without any expectations of
services for value any kind of monetary reward or benefit
 Categories: Employment,  Categories: Religious, Social, charity or
Business and Profession patriotic activities
CONCEPT OF BUSINESS

 Dervied from the word "BUSY" means "state of being

busy in an economic activity"
 Business may be defined as an economic activity
which is regularly engaged in production or purchase
and sale of goods and services to satisfy human needs
and wants with an aim to earn profits
 CHARACTERISTICS OF BUSINESS -
1. Business is an Economic Activity
 It is undertaken to earn money for livelihood
 Satisfies human needs by supplying goods and services for
mutual profit
 Can be performed at a small or at a large scale, at
individual or organised level
 Eg: Selling of goods by a shopkeeper for a value
2. Production or Procurement of
Goods & Services

 Business supplies goods to meet human needs by either

 Manufacturing or producing goods
 Procuring or purchasing the consumer or capital goods
like chocolates, refrigerator, etc
 Providing services in the form of banking, transportation,
electricity, etc.
 Eg: Buying goods from a producer with a purpose to sell
 3. Sale or Exchange of Goods & Services

 Directly or indirectly, business involves transfer or exchange of

goods and services for value.
 Goods produced or purchased for personal consumption
cannot be a business activity.
 Cooking food at home for the family is not business, but
cooking food and selling it to others in a restaurant is
business.
4. Dealing in Goods and Services on Regular
Basis

 For an economic activity to be a business, it is a

must that it should be undertaken on regular basis.
One single transaction does not constitute business
 Eg: An old car exchanged for purchase of a new car
is not a business activity
 5. Profit Motive

 Business earns profit not only to cover its cost but also for
survival and future growth.
 Profit is the yardstick to measure success
 Thus, businessmen make all possible efforts to maximise
profits, by increasing the volume of sales or reducing costs
 Eg: A football manufacturer sells football at Rs.1200 each
whereas its manufacturing cost is Rs.900. Rs.300 is the profit
earned to meet business expenses and future growth
 6. Uncertainity of Return

 Uncertainty of return refers to the lack of knowledge

relating to the amount of money that the business is going
to earn in a given period.
 It is not certain as to what amount of profit will be earned.
 There is always a possibility of losses being incurred,
despite the best efforts put into the business.
 7. Element of Risk

 Risk is the uncertainty associated with an exposure to loss.

 It is caused by some unfavourable or undesirable event.
 Risks are related with factors, like changes in consumer taste
and fashion, changes in method of production, strike or lockout
at workplace, increased competition in market, fire, theft,
accidents, natural calamities, etc.
 No business can altogether do away with risks.
 Economic Activities

 Business:
 Refers to a regular activity of sale of goods, which are either produced or procured
and rendering of services on a continuous basis with a motive of earning profit while
satisfying human needs.
 Profession:
 Is an occupation which involves rendering of personal services of a specialised
nature. It requires professional education, knowledge, training and experience. Such
activities are subject to guidelines or code of conduct laid down by professional
bodies
 Employment:
 Refers to occupation in which people work for others and get remunerated in return.
BASIS BUSINESS PROFESSION EMPLOYMENT

Mode of Start of business depends One can practise a Any person can start
establishment on the decision of the profession after getting his/her employment
owner and has to follow membership and after receiving letter of
legal formalities if any to certificate of practice appointment and
establish business. from the respective signing of employment
professional body contract.

Nature of Involves production or Involves providing of It involves performing

Work purchase and sale of personalized expert all work as agreed in
goods and services to services the service contract or
satisfy human needs and job description
wants
Main To earn maximum profit To provide professional To earn regular income
Objective services and satisfy the
employer
BASIS BUSINESS PROFESSION EMPLOYMENT

Qualification No minimum Professional Qualifications, training

qualification required to education, and experience as
start or carry business knowledge, training per the employer's
activities and experience are a requirement
must to practise
profession
Reward/ Profits are owners reward Professional fee Salary/Wages
Return

Investment Owner needs to Limited capital No investment

organize investment needed to establish required
through personal or
other sources
depending on the size
and nature of business
BASIS BUSINESS PROFESSION EMPLOYMENT

Risk Risk is involved due to A professional usually Salaries are fixed. They
uncertainty of profits receives predefined do not depend on
or agreed fee, thus company's
moderate risk performance, therefore
no risk at all
Transfer of Transfer possible with Not possible Not possible
interest some formalities
Code of No prescribed code of Code of conduct as Needs to follow the
Conduct conduct prescribed by the code of conduct as
respective prescribed in the
professional body to service contract or as
be followed per the rules laid by
the employer
Example Shop, factory Legal, medical Jobs in banks,
profession, chartered insurance companies,
accountancy government
departments
Objectives of
Business
Objectives of Business
a) Market Standing
b) Innovation
c) Productivity
d) Physical and Financial Resources
e) Earning Profits
f) Manager Performance
g) Worker Performance
h) Social responsibility
 Objectives of Business
a
Market Standing
It refers to the position of an enterprise in
relation to its competitions by providing quality
products and better service to its customers
 Objectives of Business
b
Innovation (Novelty)
Innovation means the introduction of something
new to the market. It may be a new design,
new quality for the existing product, new
method of production etc.

1990's
 Objectives of Business
c
Productivity
Every enterprise should aim at greater
efficiency and productivity by the best use of
available resources
 Objectives of Business
d
Physical and financial resources
Acquiring physical resources like buildings,
plant and machinery, offices etc. and financial
resources or fund for its operations and ensure
its efficient use
 Objectives of Business
e
Earning profits
Profit is regarded as the life-blood of a
business to survive and to make growth and
development of the enterprise
 Objectives of Business
f
Manager performance and
development
The enterprise should take much initiative to
improve the efficiency of its managers by
conducting various programs to motivate them
 Objectives of Business
g
Worker performance and attitude
Every enterprise should aim at improving its
workers performance and their positive attitude
 Objectives of Business
i
Social responsibility
It refers to the social obligations of business
firms to contribute resources for solving
social problems and to work in a socially
desirable manner
Business Risk
 Business Risk
Risk = Possibility of loss
It can be defined as the chances of loss due
to certain uncertain events in the future
 Business Risk

Types of
Risk

Speculative Pure
Risk Risk
 Business Risk
Speculative Risk
It involves both chances of gain or loss.
If the market condition is favourable it will
result in gain, otherwise, loss.

It arises due to change in demand and supply,

change in taste and habits of customers etc.
 Business Risk
Pure Risk
Possibility of loss or even no loss.
If such events take place, it may result in
loss, non-occurrence of such events results
in absence of loss, instead of gain

It arises due to fire, theft, earthquake, strike etc.

 Causes of
Business Risk
 Natural
Causes

Other Causes Human

Causes of Risk Causes

Economic
Causes
 Causes of Business Risk
1
Natural Causes
Risk due to natural calamities

It may include damages from flood, fire,

earthquake etc.
 Causes of Business Risk
2
Human Causes
It may arise due to certain human activities

Eg: Theft, bad debt, mistakes, accidents etc.

 Causes of Business Risk
3
Economic Causes
It includes uncertainties relating to demand for
products, competition, price, change in
technology, rise in interest rate, higher taxes etc.
 Causes of Business Risk
4
Other Causes
Political disturbances, mechanical failures,
change in exchange rates, etc. come under
this category