The growth of the Indian family business has augmented with the proclamation of the globalisation period in the country. As per a research, the Indian business family firms and enterprises contribute nearly 70% to the Gross Domestic Product (GDP), which is enormous and impactful. Tata, Reliance, Birla, Bajaj, Adani, Mittals, Mahindra, Hinduja, Jindals, to name a few, and other family business firms have been working for generations in India and many even before Indian Independence.
The Post-globalisation era of the 1990s opened the Indian economy, brought significant economic reforms, and created opportunities and challenges for these family-run businesses in India. It was when MNCs and new entrepreneurs started their ventures in India. Indian business family firms faced stiff challenges from the MNCs and the new entrepreneurs to pursue resources and capital for their businesses. Those family farms survived the globalisation transition and flourished, which adapted themselves to the new business models of the globalisation era.
Before globalisation, family-run businesses were operating only in permitted sectors as there was government control over many sectors. But globalisation introduced an array of prospects and scope for the family-run companies to rise in the country. Family businesses stretched their horizons and invested in manufacturing, retail, wholesale, service sector, and other industrial sectors in the globalisation era.
As the trade and business got licenses to invest in sectors previously under government control, the family-run business made optimum utilisation of the opportunities after globalisation. The Indian economy also soared with the rise in the companies of the family firms. Since most of these family businesses existed until a century ago, it proved that they witnessed growth amidst all odds and limitations.
The family business firms are known for showing their business acumen in choosing suitable heads for their businesses in India. These firms have successfully adopted succession plans and are doing it now to ensure a smooth generational transition. The family businesses are facilitating their generation next to head their business while there is also a practice of employing professionals in key positions instead of their family members. Ambani family of Reliance Group, Bajaj family of Bajaj Group, Jindal family of Jindal group, and other family business houses are the perfect example of adopting a succession plan that delivers success to the Reliance group, which is among the country’s biggest corporate houses.
Both the approaches suit these business firms well. The success of Indian businesses corresponds with the Indian business family firms contributing to the Indian GDP. Those big family businesses also weathered the adverse conditions and adopted new methodologies and practices instead of old policies and traditions. Covid-19 pandemic created challenges for the Indian family business due to lockdowns, restrictions, and meltdown in the economy. The generation next of family business firms, however, embraced digital working and technology-driven policies to survive the pandemic and flourish their businesses. If India has to dream of becoming a 5 trillion economy, then the family businesses will have to play a crucial role in it.
(Keshav Maheshwari is the Managing Director of Allen Career Institute Overseas)