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Millennium Post

Changing contours

While Gujaratis remain India’s wealthiest, presiding over flourishing industries, the brewing start-up space is set to change the composition of the country’s business environment

Changing contours

Gone are the days of the multidimensional industrial house concept. And, so is the leadership of the Marwari business community. India's private sector industrial and business environment has seen a sea change in the last 50 years. Among the majors, the only survivor is the House of Tatas, still holding the top position. Till three decades after the country's independence from the British rule, a group of 20 ruled the country's business and industrial scene. It was almost like Japanese Keidanren or South Korean Chaebol. India's 20 big industrial groups in the 1950s and 1960s were: Tata, Birla, Martin Burn, Sahu Jain, Bird Heilgers, Andrew Yule, Sriram, Mafatlal, Kasturbhai Lalbhai, JK Singhania, Walchand, Thapar, Bangur, Indra Singh, Seshasayee, Ramkrishna, Kirloskar, Mahindra, Sharpoorji and Wadia. Barring Tata, A V Birla group from the Birla clan and Mahindra, none other exist in today's list of leading business groups and enterprises.

At the end of 2019, India's biggest groups and enterprises are Tata, Mukesh Ambani, AV Birla, Vedanta, Bharati, Larsen & Toubro, Adani, HDFC, Mahindra, ICICI Bank, OP Jindal, JSW group, Jaypee, Infosys, Wipro, DLF, Axis Bank, GMR and Rahul Bajaj. The industrial scene is fast changing. The 2020s may witness a further change in the character and composition of India's business environment with new big players from new industries such as drugs and pharmaceuticals and startups entering the big league. The new generation Gujaratis are emerging as the country's next big business driver while most of the old business houses continue to split over the succession issue.

By GDP, Gujarat is just a rung above the sixth-ranked Bengal. However, by individual wealth, Gujaratis top the country's US$ billionaires' list with five out of India's top ten billionaires belonging to the community. They hold formidable positions in industries such as petroleum oil refining, telecom, retailing, ports and infrastructure, banking and insurance, drugs and pharmaceuticals among others. Businessmen such as Mukesh Ambani, Gautam Adani, Uday Kotak and Dilip Shangvi are growing at a feverish pace. Even the House of Tatas has its roots in Gujarat where Jamsetji Nusserwanji Tata, India's pioneering industrialist, was born in 1839. Tata was born at Gujarat's Navsari along the Puma River. Tatas had long shifted their base to Mumbai, spreading their business tentacles across the world — from steel and mining to infotech, automobile, investments, tea, coffee, salt and retailing.

The rise of Gujaratis in the wealth chart since the 1970s also saw the decline of traditional Marwari industrial houses, which ruled the country's business scene for almost a century. Among the rising Gujarati groups need to be watched in the 2020s are those headed by Ajay Piramal, Sudhir Mehta, Aswin Dani, Hashmukh Chudgar, Pankaj Patel and Mahendra Choksi. They all are part of India's top 50 billionaires. Notably, nine of the current top 20 business groups owe their rise to the opportunities unleashed by the reforms such as the abolition of industrial licensing, free cross-border movement of capital and opening of sectors such as banking, infrastructure and telecom for the private sector.

However, business in the 2020s promises to be tougher for Indian entrepreneurs. Manipulative government policies of the 1970s and 1980s that definitively helped several businessmen such as Dhirubhai Ambani, founder of Reliance Industries, and Bhai Mohan Singh, founder of Ranbaxy Laboratories (now part of Sun Pharmaceutical Industries) take anchor positions in their respective industries. They are unlikely to be repeated. The country is becoming increasingly dependent on big foreign investments to grow its economy. Business competition is going to grow bigger in the coming years with foreign investors in both the manufacturing and services sectors calling the shots. Most Indian production industries barring metals, mining, power and pharmaceuticals, are likely to see strong competition from foreign investors. Even the services sector which offers the best growth opportunity for Indian entrepreneurs may come under competition from deep-pocket multinationals such as Walmart and Amazon. The Gross Value Added (GVA) for India's services sector at current prices is estimated at Rs 92.26 lakh crore in 2018-19. This sector accounts for 54.40 per cent of India's total GVA of Rs 169.61 lakh crore. The aggressive way Walmart of the USA gobbled up India's Flipkart under a $16-billion deal, it marked a milestone in the world's largest e-commerce deal ever. The deal, sealed in 2018, put Walmart directly on the map of India's growing e-commerce market — estimated to be around over $200 billion by 2026 — against the likes of the US e-com player Amazon.

While education, healthcare, hospitality, real estate, insurance, infotech and telecom businesses promise to grow bigger in the 2020s, the new era may see the rise of some Indian billionaires in the startup space. Among the most promising startups in the decade are OYO Hotels and Homes; payment platform Razorpay; electric scooter platform Bounce; data labelling platform Playment (repeat Playment); logistic business platform Rivigo; digital insurance platform Acko; artificial intelligence-powered mfine (repeat mfine, all in lc); internet platform TapChief; and wellness platform Cure.Fit.

Of these startups, Gurugram-headquartered OYO Hotels and Homes, having a global headcount of 12,000, is founded by a 19-year-old, Ritesh Agarwal. Ritesh is now around 25. The start-up has already become a decacorn (repeat decacorn), valued at over $10 billion. It has also ventured into co-working and expanded into Europe and the US. The company has built entrepreneurialism into its bones. It empowers its staff — or so-called OYOpreneurs — with ownership of their own projects, and gives them access to benefits like employee stock options and childcare. The company is looking to hire over 10,000 people globally within the next year. Till now, Bengaluru is the hottest startup venue. Gurugram and Mumbai are the next. The startup space is expected to generate at least a few billionaires in the 2020s. Till now, India has over 120 billionaires — the world's third-largest group of ultra-rich, after the US and China.

Views expressed are strictly personal

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