Business activities in India have evolved over a long period of time. Following are the different stages of the evolution of business in India:
1. Family centered village communities
At the early stage of evolution life was relatively simple. Communities lived together in small self sufficient villages. They produced what they needed. Rearing of animals, hunting and fishing were the main occupations. Exchange of goods for goods, which is known as barter system helped people to meet their limited diverse needs. Exchange under barter system could not take place unless two people need each other’s surplus commodities. This double coincidence of needs and surplus of two persons matching each other’s needs were rare and therefore exchange was difficult. Besides, there was no common measure of value. It was difficult to fix the exchange value of one commodity against the other. A commonly accepted commodity like salt or quantity of grains came to be accepted as a medium of exchange. This was an improvement over the barter system.
2. Development of local markets
This is the second stage in the evolution of business activities. Local markets developed when people started coming together at a common place at regular times. Thus it emerged as a convenient meeting point for the people having surplus goods to negotiate or bargain for buying and selling their goods. Some people started buying for the purpose of selling. Gradually trade and traders came into existence.
3. Middle Ages, town economy and emergence of money
Small towns slowly started emerging for the village markets. Places where the courts were located or capital centers started attracting people from villages. Artisans started small workshops in towns. Spinning and weaving, ornament making etc started coming together in towns. Kings introduced metallic currency as a medium of exchange. These currencies with royal emblem facilitated easy buying and selling of goods. Archeological evidences suggest that towns and metallic currencies existed in India even during the first century AD. (Not the middle ages as mentioned in the text book).
4. Trading across the seas
Overseas trading is the next stage in the development of business. Limited overseas trading was carried out even during the pre-Christian era between Indian Kingdoms and the countries in the Middle East. With the opening of trade routes by the Europeans in the 15th Century the trading activities became wider. During the subsequent four centuries major European powers opened their trade centres at different places in the country.
5. Machine age / Industrial Revolution
Industrial revolution in England and other parts of Europe in the 18th century changed the volume of production tremendously. Goods became cheaper and sophisticated. Large scale marketing became essential for the survival of large industries. Transport and communications changed due to the invention steam engine and locomotives.
6. Decline of cottage industries and handicrafts
Decline of cottage industries was the side effect of industrial revolution. Large scale industries could produce goods at very low cost that provided them a competitive advantage. Cottage industries and handicrafts were pushed to the edge by the influx of industrial products. Self sufficient villages of the past became over crowded cities. Need became greed. Simple life style and limited needs changed to complex life style of cut throat competition to feed insatiable greed.
7. Growth of large scale business
The British rule was firmly established in India by the middle of the 19th century. They modernized the transport and communication in the country. Little kingdoms historically quarrelling against each other were united as a single country. Roads and railways were built. By the beginning of the first quarter of the 20th century large scale industries producing iron and steel, cement, automobiles, ships, sugar and textiles came to be established.
8. Growth of public and private enterprises after independence
After independence the nature and scope of business changed in many ways. Large scale industries were started in public and private sector. Oil, natural gas, locomotives, telecommunications, banking, insurance and all sectors of business achieved tremendous growth after independence. Apart from basic and key industries consumer durables such as TV, washing machines, refrigerators etc. also achieved substantial progress during the post independence period.
Foreign investment in industries in various sectors has increased in recent times. Liberalization paved the way for large scale investment in automobile, information technology, consumer electronics and fast food business. India is attractive to foreign investors due to our excellent track record of rule of law, democracy and respect for human rights.
Source: Business Studies Blog
