MODULE THREE: EVOLUTION OF BUSINESS & INDUSTRY IN INDIA

• Structure of Indian society,

• LPG era,
• Economic reforms since 1991,
• Entrepreneurship Culture in India,
• Industrial Policy, 2014&
• changing economic policy era.
Structure of Indian society:
The structure of Indian society is complex and diverse, shaped by millennia of history,
culture, religion, and socio-economic factors. While it's impossible to capture every
nuance in a brief overview, here are some key elements:
1. Caste System: The caste system has been a defining feature of Indian society for
centuries. It categorizes people into hierarchical social groups based on birth, with limited
mobility between castes. The system traditionally includes four main varnas (categories)
- Brahmins (priests and scholars), Kshatriyas (warriors and rulers), Vaishyas (merchants
and traders), and Shudras (laborers). Below these varnas are numerous sub-castes or jatis,
each with social and occupational roles.
2. Religious Diversity: India is home to several major religions, including Hinduism, Islam,
Christianity, Sikhism, Buddhism, and Jainism, among others. This diversity contributes
to the cultural fabric of the nation and influences various aspects of social life.
3. Family Structure: Indian society often places a strong emphasis on family and kinship
ties. The extended family system, where multiple generations live together under one
roof, is common, although nuclear families are increasingly prevalent, especially in urban
areas. Respect for elders and familial obligations are deeply ingrained cultural values.
4. Gender Roles: Gender roles in India have been traditionally defined by patriarchal
norms, though there are regional variations. Women are often expected to prioritize
family and domestic duties, although there have been significant strides towards gender
equality in recent decades, particularly in urban areas. Nevertheless, challenges such as
gender-based violence and unequal access to education and employment persist.
5. Rural-Urban Divide: India's society exhibits a significant rural-urban divide. While
urban areas offer greater access to education, employment opportunities, and modern
amenities, rural communities often face challenges related to poverty, inadequate
infrastructure, and limited access to basic services.
6. Language and Cultural Diversity: India is diverse linguistically and culturally, with
hundreds of languages spoken nationwide. Hindi is the official language, but each state
has its official language(s), adding to the rich tapestry of Indian culture.
7. Economic Disparities: India's rapid economic growth has led to a burgeoning middle
class, but poverty remains a pervasive issue, particularly in rural areas and among
marginalized communities. Economic disparities contribute to social inequalities and
shape access to resources and opportunities.
8. Education and Social Mobility: Education is seen as a key driver of social mobility in
India. While access to education has improved in recent years, disparities in quality and
availability persist, particularly between rural and urban areas and among different socio-
economic groups.
LPG era: The LPG era in India refers to the period of economic reforms initiated in the
early 1990s, which were aimed at liberalizing the Indian economy and moving away from
the previous era of state-controlled economic policies. LPG stands for Liberalization,
Privatization, and Globalization, which were the key components of these reforms.

1) Liberalization: The government initiated policies to reduce the role of the state in
various sectors of the economy. This involved reducing bureaucratic regulations,
dismantling licensing requirements, and promoting competition.
2) Privatization: The government started to divest its ownership in many state-owned
enterprises (SOEs) by selling off shares to private investors. This was aimed at
improving efficiency, productivity, and competitiveness in sectors that were
previously dominated by public enterprises.
3) Globalization: India opened up its economy to international trade and investment
by reducing tariffs, easing restrictions on foreign investment, and promoting
exports. This integration into the global economy led to increased competition,
technology transfer, and access to foreign markets.
The LPG reforms had a significant impact on the Indian economy, leading to higher
economic growth rates, increased foreign investment, and improvements in infrastructure
and living standards. However, they also resulted in challenges such as job displacement
in certain sectors and widening income inequality. Overall, the LPG era transformed India
into one of the fastest-growing major economies in the world.
Economic reforms of 1991:
Since the landmark economic reforms of 1991, India has undergone significant changes in
its economic policies, leading to transformative shifts in various sectors. Here are some key
economic reforms and developments since 1991:
1. Liberalization of Trade and Investment: The Indian government significantly reduced
import tariffs and trade barriers, allowing for greater integration into the global economy.
Foreign Direct Investment (FDI) norms were relaxed, encouraging foreign companies to
invest in India across various sectors.
2. Industrial De-Licensing and Deregulation: The License Raj, which involved a complex
system of industrial licenses and permits, was dismantled. Many industries were opened
up to private participation, fostering competition and efficiency.
 3. Financial Sector Reforms: The banking and financial sectors underwent substantial
reforms, including the establishment of private and foreign banks, deregulation of interest
rates, and the introduction of new financial instruments. The Reserve Bank of India (RBI)
implemented measures to strengthen banking regulations and improve financial stability.
4. Fiscal Policy Reforms: Efforts were made to rationalize and simplify the tax structure.
The implementation of the Goods and Services Tax (GST) in 2017 was a significant step
towards creating a unified tax regime across the country.
5. Infrastructure Development: There was a focus on infrastructure development,
including investments in transportation, power generation, telecommunications, and rural
infrastructure. Public-private partnerships (PPPs) were promoted to mobilize private
investment in infrastructure projects.
6. Social Sector Reforms: Alongside economic reforms, there were efforts to improve
social indicators such as education, healthcare, and poverty alleviation through various
government schemes and programs.
7. Technology and Innovation: The liberalization policies facilitated the growth of the
Information Technology (IT) and IT-enabled services sectors, making India a global hub
for software development and outsourcing.
8. Rural Development and Agriculture: Reforms were initiated to modernize agriculture,
improve productivity, and increase farmer incomes. Initiatives such as the National Rural
Employment Guarantee Act (NREGA) aimed to provide employment opportunities and
enhance rural livelihoods.
9. Ease of Doing Business: The government implemented measures to simplify regulations,
streamline administrative procedures, and improve the overall business environment to
attract investment and promote entrepreneurship.
These reforms have contributed to India's economic growth and transformation over the past
few decades, although challenges such as poverty, inequality, and regional disparities
persist. Continued efforts towards reform and inclusive development remain essential for
sustaining long-term economic growth and improving living standards for all segments of
society.
Entrepreneurship Culture in India: India has witnessed a significant evolution in its
entrepreneurship culture over the past few decades. Here are some key aspects of the
entrepreneurship culture in India:
1. Rise of Startups: The startup ecosystem in India has grown rapidly, especially in sectors
such as technology, e-commerce, healthcare, and finance. Cities like Bangalore, Mumbai,
Delhi-NCR, and Hyderabad have emerged as startup hubs, attracting entrepreneurs,
investors, and talent from around the world.
2. Government Support: The Indian government has launched various initiatives and
policies to promote entrepreneurship, including Startup India, Standup India, Make in
India, and Atal Innovation Mission. These programs aim to provide financial support,
mentorship, and incubation facilities to startups and innovators.
 3. Venture Capital and Angel Investment: The availability of venture capital funding and
angel investment has increased significantly, providing startups with the necessary capital
to scale their businesses. Venture capital firms, angel investors, and corporate accelerators
play a crucial role in nurturing and funding early-stage startups.
4. Technology and Innovation: India's growing pool of skilled engineers, scientists, and
entrepreneurs has fueled innovation and technological advancements. Startups are
leveraging emerging technologies such as artificial intelligence, blockchain, and IoT to
develop innovative solutions and disrupt traditional industries.
5. Entrepreneurial Mindset: There is a shift in mindset among Indian youth towards
entrepreneurship, with an increasing number of individuals choosing to start their
businesses rather than pursuing traditional career paths. The success stories of Indian
entrepreneurs, both within India and on the global stage, serve as inspiration for aspiring
entrepreneurs.
6. Incubators and Accelerators: The proliferation of incubators, accelerators, co-working
spaces, and startup communities has created a conducive environment for
entrepreneurship. These platforms provide startups with access to mentorship,
networking opportunities, and resources to help them grow and succeed.
7. Social Entrepreneurship: There is a growing trend of social entrepreneurship in India,
with startups focusing on addressing social and environmental challenges while also
generating sustainable financial returns. These ventures aim to create positive social
impact alongside economic value.
8. Challenges and Opportunities: Despite the progress, entrepreneurs in India face various
challenges such as regulatory hurdles, access to finance, talent acquisition, infrastructure
constraints, and market competition. However, these challenges also present
opportunities for innovation and growth, driving entrepreneurs to find creative solutions
to address market needs.
Industrial Policy 2014:
 Industrial Policy – 1948. After having attained independence, the Government of
India declared its first Industrial Policy on 6th April 1948. The Industrial Policy
1948 was presented in the parliament by then Industry Minister Dr. Shyama Prasad
Mukherjee.
 In the wake of the global economic slowdown persisting in 2013-14, India’s GDP
growth for 2013-14 had recorded just 4.7% with industry growth at 0.4% and
manufacturing growth recording a negative growth of -0.7%. During the year
several initiatives were taken to give the necessary thrust to industry, whose share
in the GDP was hovering around 15%.
 During the period around 2014, India continued to focus on industrial policies that
aimed to bolster manufacturing, promote entrepreneurship, and attract investment.
Some key aspects of industrial policy during this time might include:
1) Make in India Initiative: Launched in September 2014, the Make in India campaign
aimed to transform India into a global manufacturing hub by encouraging both
domestic and foreign companies to invest in manufacturing facilities in India. The
initiative focused on improving the ease of doing business, simplifying regulations,
and enhancing infrastructure to support manufacturing activities.
2) Promotion of MSMEs: Micro, Small, and Medium Enterprises (MSMEs) play a
significant role in India's industrial landscape, contributing to employment
generation, innovation, and economic growth. Industrial policies during this period
likely included measures to promote the growth and development of MSMEs
through access to finance, technology support, skill development, and market
linkages.
3) Technology and Innovation: Encouraging innovation and technology adoption in
the industrial sector is crucial for enhancing competitiveness and productivity.
Industrial policies may have included incentives for research and development
(R&D), technology transfer, and collaboration between industry and academia to
foster innovation-led growth.
4) Infrastructure Development: Adequate infrastructure is essential for the growth of
the industrial sector. Industrial policies may have focused on improving
infrastructure such as transportation, logistics, power supply, and
telecommunications to support industrial activities and attract investment.
5) Ease of Doing Business: Simplifying regulatory procedures, reducing bureaucratic
hurdles, and improving the overall business environment are essential for
promoting industrial growth. Industrial policies may have included measures to
enhance the ease of doing business, streamline approvals, and facilitate a conducive
environment for entrepreneurship and investment.
6) Liberalisation in Foreign Direct Investment (FDI)/ and facilitation of
Intellectual Property Rights (IPR)
7) During 2014, FDI in the Defence Industry has been permitted through the
Government route up to 49%. Also, higher FDI can be allowed on a case-to-case
basis. Further, portfolio investment which was not permitted earlier has now
been allowed up to 24% under the automatic route.
8) Further, FDI in the construction, operation, and maintenance of
identified railway transport infrastructure up to 100% has been permitted
through the automatic route. In sensitive areas, from a security point of view, FDI
beyond 49% would be allowed on a case-to-case basis.
9) Recently, the norms for FDI in Construction Development Projects (which
already permitted 100% FDI through automatic route) have been further
liberalized. The minimum land area restriction has been removed for serviced
plots. In case of
10) Japan Plus: DIPP has set up a special management team to facilitate and
fast-track investment proposals from Japan. The team known as “Japan Plus” has
been operationalized w.e.f October 8, 2014.
 11) Industrial Corridors
 Delhi Mumbai Industrial Corridor (DMIC ): The first node/city-level Special Purpose
Vehicle ( SPV) under the DMIC Project with the name and title of “Aurangabad Industrial
Township Ltd.” has been incorporated.
 Integrated Industrial Township Project at Greater Noida, Uttar Pradesh; Integrated
Industrial Township Project in VikramUdyogpuri Near Ujjain in Madhya Pradesh;
Activation Area of Dholera Special Investment Region in Gujarat and Phase-I of
ShendraBidkin Industrial Park in Maharashtra are moving towards implementation.
 Chennai Bangalore Industrial Corridor (CBIC): Perspective plan has been finalized, and
three nodes, Tumkur (KN), Ponneri (TN), and Krishnapatnam (AP) have also been
identified and finalized.
 Vizag Chennai Industrial Corridor (VCIC): The Conceptual Development Plan has been
finalized, and work on the preparation of the Regional Perspective Plan (RPP) has been
initiated.
 Bengaluru Mumbai Economic Corridor (BMEC): Draft perspective plan has been
prepared.
 Amritsar Kolkata Industrial Corridor (AKIC): DMICDC has been entrusted with the
responsibility of preparing a feasibility report.
 National Industrial Corridor Development Authority (NICDA)
 Important Developments in Industries Administered by DIPP

 Leather Sector: One of the major activities under the Indian Leather
Development Programme is to provide placement-linked skill development
training to unemployed youth.
 Boiler: Modified regulations and several forms to simplify the registration of
boilers and to reduce paperwork for boiler manufacturers & users have been
undertaken.
 Salt: Identification of surplus salt land for the development of infrastructure
facilities for the manufacturing sector is being carried out.
 Explosives: It has been decided that no license under the Industries
(Development and Regulation) Act, 1951 will be necessary for mine owners to
manufacture Ammonium Nitrate Fuel Oil (ANFO) explosives. This will help
mine owners using ANFO to continue mining operations and will help the
development of the cement industry as well as the construction sector.

DEPARTMENT OF COMMERCE

I. WTO matters: India and the USA successfully resolved their differences relating to
the issue of Public Stock Holding for Food Security purposes.
I. Foreign Trade and Foreign Trade Policy: Intensive discussions are underway with
the Department of Revenue to finalize the new Foreign Trade Policy (2014-19).
II. Bilateral Relations: ASEAN-INDIA agreements on “Trade in Services and
Investment” were signed (except in the Philippines).
IV. Special Economic Zones ; Service Delivery -
Digitization and online processing of various activities relating to SEZ Developers and
Units have been introduced in all Zones from 01.11.2014.
.
V. Gems and Jewellery Sector: World Diamond Conference successfully organized.
·Long-term procurement agreement between Alroza and Indian Diamond firms for the
supply of rough diamonds signed.

VI. Good Governance initiatives: DGFT: A simplified system for issuance of Importer
Exporter Code (IEC) online will become operational w.e.f. Jan 1, 2015.
· A Complaint Resolution System for Resolution of EDI-related issues has been set up.

VII. Achievements related to IT : Website and intranet portal of the Department of

Commerce revamped, redesigned, and improved the websites of 33 Export Promotion
Councils already taken up.

The changing economic policy era: In India typically refers to the transition from a state-
controlled, inward-looking economy to a more open and market-oriented one. This
transition began in earnest in 1991 with the landmark economic reforms, often referred to
as the LPG reforms (Liberalization, Privatization, and Globalization). Here's an overview
of the changing economic policy era in India:
1. Pre-1991 Era: Before 1991, India followed a mixed economy model characterized by
extensive government control and regulation of key sectors such as industry, trade, and
finance. This approach, often referred to as the License Raj, was marked by bureaucratic
red tape, extensive licensing requirements, import restrictions, and high tariffs.
2. 1991 Economic Reforms: In response to a severe balance of payments crisis, India
embarked on a series of economic reforms in 1991 under the leadership of then-Finance
Minister Dr. Manmohan Singh. The reforms aimed to liberalize the economy, dismantle
trade barriers, promote competition, attract foreign investment, and boost economic
growth.
3. Liberalization: The liberalization measures included reducing industrial licensing,
deregulating trade and foreign investment, and freeing up various sectors from
government control. This led to increased competition, efficiency, and dynamism in the
economy.
4. Privatization: The government initiated the privatization of state-owned enterprises
(SOEs) to improve efficiency, productivity, and competitiveness in industries where the
public sector had a dominant presence. This involved selling off shares of SOEs to private
investors and encouraging private participation in sectors previously reserved for the
public sector.
5. Globalization: India embraced globalization by integrating into the global economy
through trade liberalization, reducing tariffs, and opening up to foreign investment.
Globalization facilitated technology transfer, access to international markets, and the flow
of capital, skills, and ideas across borders.
6. Post-Reform Era: The post-reform era saw sustained economic growth, averaging
around 6-7% per annum, as well as a diversification of the economy towards services and
 knowledge-based industries. India emerged as one of the fastest-growing major
economies in the world, attracting significant foreign investment and becoming a global
outsourcing hub for IT and business services.
7. Continued Reforms: While the initial wave of reforms in 1991 was transformative,
subsequent governments have continued to implement economic reforms to address
remaining challenges and capitalize on new opportunities. Reforms have focused on areas
such as tax simplification, infrastructure development, ease of doing business, labor
market flexibility, and financial sector reforms.

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