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Indian Companies in an Open Economy
The deed is done and the clock cannot be put back. Competition has come into almost all sectors of Indian industry and will increase. It is making the economy more efficient in using resources. A new breed of entrepreneurs and new industries are emerging who are able to operate successfully in this changed environment. This process must accelerate. It is in the interest of the country's growth and competitiveness that the old companies which do not wish to change and reform themselves become extinct.
It is almost 15 years since Rajiv Gandhi and V P Singh began the opening up of the Indian economy to domestic competition in some sectors, and the change in emphasis from investment primarily in basic and key sectors, to manufactured consumer goods. It is over 10 years since the abolition of industrial licensing, restrictions on size of firms, opening to foreign investment, and free imports of a variety of goods, subject to a declining level of tariffs as announced in the Chelliah Committee Report. Along with this came an increasing amount of liberalisation like the abolition of the office of the Controller of Capital Issues and freedom to companies to set premia on their share issues, declining interest rates, falling levels of inflation, better regulated financial and stock markets, to name a few.
These changes were expected to bring about many changes in industry. Among them were:
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