The document discusses the emergence of modern industries in India, comparing the variables that explain the rise of industrialists in Ahmedabad, Bombay, and Calcutta, including their occupational backgrounds, the attitudes of the colonial state, and the minority/majority status of the communities involved, such as the Marwaris in Calcutta, Parsis in Bombay, and Hindus in Ahmedabad.
The document discusses the emergence of modern industries in India, comparing the variables that explain the rise of industrialists in Ahmedabad, Bombay, and Calcutta, including their occupational backgrounds, the attitudes of the colonial state, and the minority/majority status of the communities involved, such as the Marwaris in Calcutta, Parsis in Bombay, and Hindus in Ahmedabad.
The document discusses the emergence of modern industries in India, comparing the variables that explain the rise of industrialists in Ahmedabad, Bombay, and Calcutta, including their occupational backgrounds, the attitudes of the colonial state, and the minority/majority status of the communities involved, such as the Marwaris in Calcutta, Parsis in Bombay, and Hindus in Ahmedabad.
The document discusses the emergence of modern industries in India, comparing the variables that explain the rise of industrialists in Ahmedabad, Bombay, and Calcutta, including their occupational backgrounds, the attitudes of the colonial state, and the minority/majority status of the communities involved, such as the Marwaris in Calcutta, Parsis in Bombay, and Hindus in Ahmedabad.
Rajesh Bhattacharya Email: 24-26/08/2020 IIM Calcutta Emergence of Modern Industries in India
19-21/08/2020 IIM Calcutta
European Agency Houses Since 1813 (EIC loses monopoly in trade), private traders enter. European private traders adopted a business organization called agency houses, so called because agency houses a) acted as business agents for others against a fee and b) agent of a firm in London Agency houses participated in China trade (opium) and indigo trade. Agency firms needed Indians as agents—known as banians—to assist them in a myriad ways. The banian was the centre of the operation and received a percentage of sale proceeds. Indians have their first encounter with modern business forms and ideas ( as they first developed in Europe) as banians and agents of the European Agency firms.
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Comparison: Variables explaining emergence of modern industrialists in Ahmedabad, Bombay and Calcutta a) Occupational background: whether industrialists came from trading/banking background or artisan/manufacturing/technical background b) Attitude of colonial state: To what extent British colonial rule hindered or promoted industrial development c) Minority status of community (religious , caste- based etc.): migrant traders as minority community in host society often succeed more than the native majority community; Max Weber argued there is a strong connection between religion and entrepreneurship
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Industrialization in Eastern India: Marwaris in Calcutta
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Major Industries in Calcutta Jute industries in Bengal—controlled by the Scots. At the time of World War I, all the 50 jute mills were under the control of European managing agencies, and 97% of the directorial positions were held by Britons. The Britons managed 86 % of tea plantations. 96% of the largest tea companies had board of directors that were exclusively British . 47% of the firms in coal industry were managed by non-Indians. 89 % of the major collieries were controlled by European, mostly British, firms.
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The entry of Marwaris in Industries The Marwaris had kinsmen scattered throughout India which helped them in networking; they have been present in Bengal for long. They dealt as brokers, banians, sub-contractors, agents to Europeans, making themselves almost indispensible to trade practices. They operated in trading of opium, spices, jute, etc. They amassed capital in trade, finance and speculation (using instruments like futures and options).
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Entry of Marwaris into industry Marwaris moved from trade into industry in 2 ways after WWI— i) The establishment of new jute mills and collieries ii) Steady purchases of shares in companies controlled by European managing agencies, to a point where Marwaris could first force their way into the boardrooms and then take over the firms The Marwaris provided the British with raw jute, short- term credit, and long-term loans. The British did need mediators in trade and finance, but did not welcome the Marwaris. Scottish arrogance and consequent business hostility.
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Industrialization in Western India: Parsis in Bombay
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The Western Scenario in the first half of the 19th century Bombay, coming later under the British rule, was spared the worst excesses of the early decades of the Company rule. Also, the Bombay Presidency being a chronically revenue-deficit area, depended on remittances from the Bengal Presidency, which made the EIC dependent on merchants and bankers. Bombay replaced Surat by the middle of the 18th century as the main port on the West. The Europeans made their base in Bombay and drew Indian merchants and shipbuilders, particularly Parsis, from Surat area. 26-28/06/2019 IIM Calcutta The Parsis of Bombay The relationship between the Parsis and the British in Bombay was a continuation of their positive relationship in Surat. As the Parsis in Surat were economically independent and prosperous, the British had to create an attractive economic environment to persuade them to migrate to Bombay. The Parsi community had a unique relationship with the British. They were more ‘Westernized’ than the other communities. They were loyal to the British during the Mutiny in 1857.
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Opium Trade Since 1770s the fortunes of Indian merchants were linked to the China trade. Opened up opportunities for merchants in Ahmedabad, Surat, Broach, Cambay, Baroda, Bombay. In Western India, opium trade remained a clandestine operation. Malwa opium was grown in regions within a princely state. Thus its supply was controlled by indigenous merchants; private Indian merchants shipped it to China and earned profits. EIC couldn’t stop this and hence had to legalize opium trade against export permits. In contrast, in Bengal, production and trade of opium was tightly controlled by the Company.
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Parsi industrialists The pioneers in the Bombay textile industry came almost entirely from among the Parsi traders, shippers and financiers of Bombay The Parsis started their careers as traders (in opium and raw cotton). Then, some became formal brokers to British trading houses and, finally, diversified into the cotton industry. Parsi tradition was to send their sons to work in the British firms, where they could learn on the job. The European businesses in Bombay warmly welcomed these trainees. Yet, others—Hindus, Muslims, and Jains—also became increasingly important in this period.
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Difference between Western and Eastern India Bombay benefitted from the large class of merchants from Gujarat, with a larger ethnic and communal diversity—Hindus, Parsis, Muslims, Jains etc.—in Bombay business circle. In the East, business was entirely dominated by Europeans, until challenged by the Marwaris in a bitter business fight colored by racism. Bombay benefited from a “more dynamic atmosphere of emulation and competition” and “less racial and communal strife”. The Bombay industries also showed greater flexibility to adopt innovations and tackle changing market conditions, including orienting themselves towards the domestic market. 26-28/06/2019 IIM Calcutta Industrialization in Western India: Hindus/Jains in Ahmedabad
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Ahmedabad After 1818, the British officially began to rule Ahmedabad. but the old city preserved its traditional structure of guilds and castes as well as its commercial outlook. The Indians built Ahmedabad. British did not have a major role in commercial life of Ahmedabad. In the early 18th century, many weavers, traders, and artisans fled the city because of the war between the Mughals and Marathas. Stable administration by the British brought back indigenous traders and weavers who settled there again in the nineteenth century.
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Mode of financing Ahmedabad textile mills The occupational background of the textile industrialists in Ahmedabad differed from that of their counterparts in Bombay. None of them had any experience in a British trading firm or had ever worked as a broker for a European trading company. Some of them profited handsomely from cotton trade during American Civil War. They mostly came from banking background. Ranchhodlal Chhotalal, who set up the first mill in Ahmedabad, was a Hindu civil servant. Banks and shareholders financed Bombay’s mills to a greater extent than in Ahmedabad. Ahmedabad mills were financed by small individual deposits for a fixed interest rate. 24-26/08/2020 IIM Calcutta Occupational Background of Pioneers in Indian industries In India, the early industrialists had a background of trading, banking and speculating. Indeed, they were not artisans, craftsmen, technicians, or mechanics (i.e. people connected to manufacturing) who had owned small workshops and then expanded. This is often cited as the major difference between Indian and British industrialization
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Attitude of colonial state In Calcutta, Indian businessmen were excluded from the upper ranks of the business hierarchy and faced British racism and hostility. In Bombay partnerships between Europeans and Parsis were a common feature and there was much less hostility and discrimination. In Ahmedabad, the colonial state displayed neither a positive nor a negative attitude towards Indian businesses.
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Minority status and religious background of pioneer industrialists Marwaris in Calcutta: They were Hindus and Jains from Marwar; the British considered them insiders but the Bengalis considered them outsiders. Parsis in Bombay: Initially, they were a majority, later they became a minority since 1850s. Hindus in Ahmedabad: Majority community and insiders. 24-26/08/2020 IIM Calcutta
