Growth of Entrepreneurship and The March of

GROWTH OF ENTREPRENEURSHIP
AND
THE MARCH OF TECHNOLOGY IN INDIA

Dr. Y. V. S. S. Murty

At the time of Independence, industry in general and chemical industry in particular was not significant in the country with few units dotting the country here and there.  There was a fairly large textile and jute processing industry apart from primary agro industries like rice milling, cotton ginning, flour mills and cane sugar factories.  Most of the industries were based on imported plant and machinery and even whatever little technology was involved in these industries was imported.

The education system in the country was oriented to supply personnel for service mostly in the Government and a small percentage to the industry.  Innovation and entrepreneurship was practically non existent

The country was faced with severe problems of poverty, extreme food shortage, famines, poor agriculture output and un-inhibited population growth.  Big business houses like Tatas, Birlas, Dalmias dominated the steel, cement & paper industry. They had nurtured competent engineers and managers to run their industries, but the entrepreneurship did not spread beyond their families.

Immediately after independence the Government embarked on major irrigation projects and agricultural research stations to increase the food production and productivity which made the nation self sufficient in food requirements even after meeting the needs of the exploding population. The next objective of the Government was to hone the scientific and technological talent towards entrepreneurship by providing the necessary financial inputs and the infrastructure facilities. A number of schemes came on the anvil such as 50:50 equity participation in the project cost, seed capital, risk capital assistance and soft loans to the promoters. A number of industrial areas and industrial estates were built by the Government with power and water supply, roads and buildings.
Financial incentives were also provided and every effort was made to attract the technical people to set up industries particularly in the small and the medium scale sector. A massive drive was organized in all the States by setting up Industrial Development, Financial and Infrastructure Corporations which were autonomous bodies empowered to decide and finance the projects. 
I was one of the earliest beneficiaries of such liberal financial packages in 1968 namely a 50:50 joint venture with APIDC which promoted a Sodium Metal manufacturing unit, the first of its kind in the country and one of the five such units then in the world. The project was based on a claim by me that I would translate text book information into a commercial plant inspite of the well known fact that the process for the electrolytic production of Sodium Metal is a well guarded technology confined to the former war time powers. Such was the fervor with which technocrats were supported by the Government that this incredulous proposal by me was sanctioned as a joint venture.

In 1968, 5 joint ventures were launched, of which only the joint venture with me is surviving and the rest perished long long ago.  I justified the trust the Corporation had in me. This in fact led to many more J. Vs and much more liberalized sanctions. Inspite of many such concessions it had taken quite a few years for the technical personnel to opt to be an entrepreneur from secure “no risk” jobs. There were also some schemes in which the scientists were given a lean on their job for a period of 3 years along with a lump sum grant of Rs.25 Lakhs to set up an industry and make a success of it.  If it failed, they could come to their parent job.

The various schemes mentioned gained momentum between 1968-1975 and a number of small and medium scale industries came into existence. Quite a few of them perished, either because of inadequate technical skills, managerial skills or inability to compete in the market, quality problems and also to some extent to the greed of the entrepreneur. None-the-less the success rate of the industries that came into existence was almost 20% which is a very decent achievement, considering that at start the entrepreneur man power resource was almost zero.

Between 1975 to 1985 there was a big spurt in the establishment of many industries particularly the chemical industries like pharmaceuticals, pharma intermediates, dyestuffs and textile auxiliaries which flourished due to protection from foreign competition by the imposition of heavy import duty, market assistance from the Government and easy access to project funds through public issues for which there was great response from the public. 

Public sector undertakings which were set up by the Government in 1950’s and 1960’s like the giant steel factories, HEC, IDPL, HOC., Fertiliser factories, Petroleum Industry etc., were the breeding grounds for entrepreneurs. They also ensured availability of basic raw material for the growth of the industry and avoid excessive dependence on imported materials.

Thus, by early 1990’s in A.P. alone 120 chemical and allied units, 30 drugs and pharmaceutical industries, 30 paper and pulp units, about 40 cement units, 140 food and agriculture industries and 30 mineral based industries were in operation.  This is a growth achieved in 30 years between 1960-1990.
Paper mills have increased their capacities from 5 M.T. per day to 200 Te per day.  Cement industry was able to set up one million / 3 million tones per year plants. Fertilizer industry grew from 1 M.T. Ammonia per day to 1350 M.T. per day with 28 such factories in India. We find growth from a small 100,000 tones petroleum refinery in Assam to 5 to 8 million tones refinery in Koyali, Trombay, Vizag etc., and now 27 million tons refinery at Jamnagar.

Power generation which was hardly 100 MW in early 1950’s has gone up to 4000 MW in mid 1990’s and presently to 8000 MW in A.P. alone.  Installed power generation capacity in India in 1947 was 1400 M.W. today it is 110,000 M.W.  Coal output has risen from 40 million tones to 340 million tonnes.             Post offices and railways are the largest net works in the world.

Satellite communication and information and satellites launching have also come into   being. Space launch vehicles and space exploration units are now made in the country with indigenous technology. Ship building has grown to great heights, aircraft carriers and frigates are now being built in the country.  Rolling stock and engines required for railways are all now made in the country and are even being exported. Electronic industry has developed phenomenally though still far behind countries like China, Taiwan, Korea etc.

Thus the effort of the Government in encouraging the growth of entrepreneurship has been a success story. By the beginning of the 21st century the Government has considerably cut down on the many sops to the entrepreneurs, like assistance in equity participation, seed capital and risk capital assistance etc., and rightly so.
The right man and the right project only gets support.  Supporting each and every project, some with even doubtful viabilities, is no longer the order of the day.  Promoting projects at any cost and thus bringing about industrialization and entrepreneurship had a long innings of 40 years and has now almost come to an end.

Financial institutions are now tightening the screws. It is now a case of survival of the fittest, of the best quality, and the lowest cost.  High standards of operation, maintenance and control of environmental and safety issues are the order of the day.

During this period also many industries perished for reasons earlier stated and also because of the advent of many who sought short cuts to success.  However, most of the industries particularly pharma & pharma intermediate chemical industry embarked on vertical integration and capacity increase to cut costs of production and survive in the intense domestic competitive environment. Problems of quality, safety and environment also started growing in proportion to the growth in capacities.

Companies of my group manufacturing several hazardous organic and inorganic chemicals, natural extract concentrates and a large no. of fine chemicals are well recognized in India and abroad in countries like Japan, Germany & USA as dependable high quality producers. Excellence, excellence all the way, no compromise. We are a recognized in-house R&D by the Ministry of Science and Technology.  We hold certificates under ISO 9001, 14000, 18000, HACCP & cGMP. We are also an Export House.

Entrepreneurship and technology are on the march and have become the engine of growth and major source for employment in the country. Dependence on the Government and public sector for employment is on the decline.

While all this is a matter of great satisfaction and pride, it is necessary to note that the country has still a long way to go to become a developed nation and get to the glory when 400 years ago it was the beacon light of the world.   In the last 50 years atleast 3 out of every 1000 technicians, engineers and scientists in the country came into businesses industrial and service provider sector.  Currently it is around 10 in thousand.

India would   reach   great eminence if even 5% of the brilliant and bright students coming out of the colleges and universities become entrepreneurs, service providers and employers. 

It is necessary here to point out that the biggest area for growth and opportunities is (1) the specialty chemicals and pharmaceutical intermediates (2) automobile ancillaries (3) I.T. sector and (4) and the farm sector which holds the greatest challenge. The production of bulk drugs and pharmaceuticals is slowly going out of reach of the average entrepreneur by the sheer scale of operation and market intensive nature of the industry. However, the pharmaceutical ingredients and specialty chemicals are still a vast virgin field in which innovation, quality and cost saving offer great opportunities to entrepreneurs.  This is an area in which my group companies are now thriving.

Automobile manufacture and marketing is beyond the average entrepreneur.  It is and will continue to be in the hands of giant corporates.  However, the thousands of parts required for the automobiles have to be produced in the ancillaries where precision, quality and reproducibility are hallmarks for success the talent for which is abundant in the country.  Today about 20% of the automobile ancillary industry is said to be in the hands of the Indian entrepreneurs.

I.T.: - This has seen tremendous growth in the last two decades but it is saddening to mention that inspite of the talent and large number of I.T. personnel working in India and abroad most of them appear to be data processors only. Programmers are very few and software developers are still far less.  These are the areas in which the I.T. engineers have to make greater impact. The hardware industry too is lagging far behind the other countries.

The growth of the entrepreneurship and the march of technology in the last 50 years are indeed very heartening.  Thousands, nay, lakhs of engineers in various disciplines are pouring out of colleges and universities on which talent pool the country will have to march further on.

Farm sector: -  Much has been done in the farm sector. However more has yet to be done.  Bio-tech, genetic manipulation organic farming, increasing farm productivity, water conservation –these are challenges which the engineering and scientific community has to address.

Water: - In future there will be wars for water and not for land.  We already have mini battles in the country between states for this precious commodity. Water conservation, recycling, prevention of pollution are the great challenges facing mankind.

Energy sector: - The energy crisis is bound to deepen more and more unless solutions are found.  Our hopes are now on harnessing solar energy and hopefully we will succeed.  A word of caution is now needed.  There is great need to recognize that we as individuals and our country are entering into the international arena as a developing / developed country. So are many other countries hitherto considered ward. Every country wants to use its resources as well as it can, and nurture its human talent as best as it can. Examples are Gulf countries, former Soviet countries, Malaysia, Singapore, Koreas, Taiwan, India and China.

Our mind set has to change.  What we are facing is not technological obsolescence, but commercial obsolescence.

As they have plenty of cheap energy and hydrocarbons as resources it is not easy to compete with gulf countries in hydrocarbon industry or even in caustic soda chlorine industry. With vast sources of Iron ore and cheap energy available, the former Soviet countries can produce steel at far lower cost than any other country.

The shift is from massive low value, high volume products to high value low volume products. Change from steel to special steel and armaments. Change from chlorine production to chlorine based products. Shift from electro chemical and electro metallurgical primary products to down stream higher value products.

It is economic sense to shed the ancestral house and convert it into an apartment complex.

I followed this principle 15 years ago when I had given up voluntarily the manufacture of Sodium Metal, which I ran for nearly 20 years, a much acclaimed pioneering effort, as the shortage and cost of power made the production uneconomic. I now import Sodium Metal from abroad  (I am the largest importer and consumer of Sodium Metal) and produce several commercial products with higher value addition, such as Sodium Amide, Sodium Azide, Sodium Hydride, Sodium Alkoxides, HMDS Sodium, Amino pyridines, Tetrazoles etc., all based on Sodium Metal. I now have a basket of high value commercially viable products which are being exported to Japan, Germany and USA. We are continuously and constantly developing new products, and new markets, some of them brought into commercial production. Our recent entry into Natural extract concentrates, such as Capsaicin pure, Curcumin pure, Solanesol 90% are some examples.
We are not averse to get out of production of any product when we face commercial obsolesance. Policy is to explore technology, move with the tide and times.  There are today many such entrepreneurs like me, who are making success a habit.  

In India, we have the competence, we have the knowledge. What we lack is dedication and enterprise which today is coming into its own.

I hope and pray that the youth will bring to the country greater glory and achievement.

* Prof. C. Chiranjivi Endowment Lecture delivered at Andhra University, Waltair on 10 Sept 2004