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Family Business

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The great Indian family business

The Indian family business dates back to the latter half of the 19th century, which also marks the beginning of business in India. It is not surprising then that family-run businesses currently account for a whopping 95 per cent of all Indian companies.
Considering that one-third of the companies listed in Fortune 500 fall under this category, including the currently second Wal-Mart, family businesses have indubitably cemented their place in the world economy.

The Indian economy, currently in a state of rapid development, is burgeoning with innumerable small and medium-sized family-run enterprises. Family businesses in India initially started in the 1890s as a means to promote import substitution and attain economic freedom from the British. These enterprises were an integral part of India’s freedom struggle, and as part of the Swadeshi movement, got special treatment and subsidies from the government.

The businesses consolidated their positions as near monopolies under the protective environment of the licence raj and their inefficiencies did not get exposed to the indefatigable market realities. Some of the prominent business families during the
1960s were the Modis, Thapars, Shrirams, Singhanias, Birlas, Wadias and Godrej.

The new economic policy

In 1991, India’s forex reserves dwindled rapidly and the IMF extended help but at a price, forcing India to open its markets to the outside world. With the protection gone, the family business had to face stiff competition from both new domestic players and well-established international players who were better equipped both technologically and managerially and were backed by much deeper pockets. The business scenario was changing and a new breed of businesses emerged in the 1990s, with the focus now shifting from the

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