Today, many more Indian entrepreneurs are emerging in the business world. Astonishingly
enough, they are quite different from when they first appeared over twenty years
ago. In the 1980s, the Indian economy was greatly bogged down by an atrocious socialistic
ideology, whereby a rigid license raj and corrupt bureaucratic control was how businesses
It began when Jawaharlal Nehru, India’s first Prime Minister, wanted to tailor the
Indian economy after the Soviet Union’s socialistic economic structure. In his mind,
he strongly believed that the state should control every aspect of the Indian economy,
and thus, a planned economic growth could be achieved. His idea revolved around
issuing licenses to a worthy few who were selected based on their credentials and
the existing market economies of operation. Although Nehru had good intentions,
the way he executed his plan proved to be counterproductive.
Nehru strongly believed that entrepreneurs should focus their efforts on nation
building rather than selling products or competing with each other, because he felt
that it did not directly contribute to this cause. To ensure that the concept of
nation building was properly enforced by all business owners, Nehru made sure that
every entrepreneur received a “certified nation building” license from the relevant
license officer. He also put forth a rule stating that only two to three companies
could be granted a license within the same industry, greatly limiting the possibility
of establishing competition.
In addition, Nehru wanted industries to be located all over India, rather than be
positioned at select industrial hubs, a strategy which he theorized would ensure
a balanced industrial growth. Therefore, he passed laws requiring entrepreneurs
to obtain a location permit (license) prior to the start of their company. In order
to avoid capitalistic monopolies, Nehru stated that companies should obtain licenses
to expand their production capacity. To prevent money laundering within companies,
another major issue, Nehru made it mandatory for the excise and licensing officials
to visit and audit every company each year in order to ensure quality assurance.
All of these strict regulations had their problems as well. Not only did every entrepreneur
need to obtain multiple licenses but the government officers who were in charge
of overseeing all licensing aspects were underpaid and eventually resorted to bribery
and corruption. This led to entrepreneurs paying bribes in order to acquire the
Situations got so precarious that even business owners had to obtain a government
license just to meet with foreign business delegates in other countries. During
those times, entrepreneurs flocked around ideas that mostly involved cornering manufacturing
or importing licenses. This sort of business environment offered absolutely no incentive
to invest time in technical innovation to reduce manufacturing costs or even offer
better quality products and services since one could get far higher results by influencing
the customs or excise officer to classify a product under a category that attracted
a lower rate of duty.
During this license raj, most highly qualified young Indian graduates had no family
connections nor were interested in influencing excise officers. Therefore, many
of them immigrated to the United States to avoid such red tape and to gain economic
freedom. Realizing that the existing economy was in dire crisis, Indian business
practices began changing for the better in 1991 after extensive economic reforms.
By ridding the old socialistic license raj system, Indian entrepreneurs no longer
needed to worry about excise officers in order to achieve their business goals.
This encouraged them to start focusing on expanding their markets and acquiring
Rapid economic growth has resulted since the removal of the license raj. For instance,
the Indian economy has sustained an average growth rate of over 6% annually, with
the gross domestic product or GDP being around 9.2 % between 2006 and 2007. In the
past decade, India’s GDP has also arisen from 21 % to 33 %, and India’s foreign
exchange reserves have reached over $200 billion. Domestic markets have also grown
substantially to support innovation. Worldwide, India’s vast economic success is
recognized by many national and international corporations who have not only taken
advantage of its pool of high-quality scientific talent but have also established
many research and development facilities (R&D) throughout India.
Today’s promising market conditions have been very encouraging to many young engineering
graduates who strongly believe that they have the technical knowledge and skills
to attract new customers. These young Indian entrepreneurs are not the typical and
conventional business entrepreneur. They are the children of many business professionals.
As elite graduates of IITs, National Institutes of Technology, Indian Institute
of Science, and the IIMs, this new young breed of worthy entrepreneurs have targeted
their efforts on innovative ways to technologically address the genuine needs of
millions of people.
In the past few years, entrepreneurship in India has slowly taken off. Indian engineers
who migrated to the United States in the eighties have found the U.S. to be a haven
for entrepreneurial pursuits and have become highly successful in their respective
fields. They initially started high technology product companies in Silicon Valley
that primarily focused on solving critical market problems. Most of these Indian
entrepreneurs, after making fortunes by excelling in their respective market segments,
started helping entrepreneurs in India with start up companies.
The rapid success of Indian American entrepreneurs has led to vast angel investments
in India. Organizing themselves into angel confederacies after the Band of Angels
in the Silicon Valley, each member diligently researches and pools their own capital
for each prospective investment. Being known for founding and establishing well-known
companies such as Symantec, Logitech, National Semiconductor, Sun Microsystems,
Hewlett Packard, and Intuit, etc., these angel investors like to invest their time
and money into new, cutting edge, start-up companies. This trend has boasted the
pace at which new startups are
being established in India.
India offers a unique incubation environment for most entrepreneurs, greatly distinguishing
it from other western democracies. A country where almost 50% of the Indian population
is below 35 years old, it is apparent that India has a large working class. Ineffective
political regimes have been enforcing their outdated ideologies on this dynamic
young population. In addition, these young Indians have become acclimated to non
security related civic amenities such as laying roads, clean drinking water, and
appropriate health services from the government. Most of the civic amenities are
in shambles. In fact, situations in India have become so slow that the Indian government
needs 6 months to execute the very same civic infrastructure project that the Chinese
government executes within a couple of days.
Because of such ineffective government implementation, the entire society of India
has become chaotic. For example, traffic conditions in India are considered to be
horrendous. Since there are no existing highways and a basic auto infrastructure,
it takes the average commuter about an hour to travel approximately 10 miles. In
addition, shipping in Indian ports is in shambles. A typical entrepreneur has to
wait in a queue at the sea port to get his/her products exported to a foreign country.
Although this may sound quite daunting, it is this very chaotic environment that
train Indians how to make sure that things get done in time irrespective of the
Although the roads are terrible and the ports have waitlists, most Indian businesses
try out creative strategies to make sure their services or products reach overseas
customers on time. It is this struggle to stick to the promised schedule that really
differentiates an Indian entrepreneur from his/her western counterparts. Indians
grow up in a chaotic environment and learn how to manage their lives in such bleak
environments. Indian entrepreneurs are groomed to get things done, no matter what
the odds are.