Role of Business groups



  • The Indian National Movement was, in its initial stages during the second half of the nineteenth century, mainly confined to the educated middle classes.
  • However, in course of time, it began to expand its social base and gradually other classes and sections of society began to join it.
  • Eventually, the Modern Capitalist class began to emerge in India in the second half of the 19th Century.
  • Till about World War I, there were few Indian capitalists and the size of their investments was also not substantial
    • Moreover, they were as yet largely dependent on the colonial government’s support.
    • At this stage of development, it was hardly possible for the Indian capitalists as a class to take an open confrontationist position with regard to the colonial state
    • Hence, they stayed away from the Swadeshi Movement (1905-08) and largely opposed the Non-Cooperation Movement (1920-22).
  • Subsequently, however, the Capitalists’ position changed, and there were many Indian Capitalists’ who extended their support to the freedom struggle.


Emergence and Growth of the Capitalist Class in India

  • Most early Indian industrialists developed from the merchants who played the role of middlemen and collaborators for British businessmen.
  • There was thus a harmonious relationship in the early period between the big Indian businessmen and the British capitalists and the latter served as models for setting up industries in India in the initial period.
  • There was steady growth of Indian industries since the mid-nineteenth century.
    • However, by the beginning of 20th Century, the faith in the beneficial effects of the Raj began to dwindle.
  • Since the First World War, the Indian capitalists made inroads into many sectors.
    • The processes of import substitution, expansion of domestic market, growth of internal trade and transfer of capital from moneylending and land to industrial investment resulted in increasing control of Indian capital.
  • Thus, by 1944, about 62% of larger industrial units and 95% of smaller industrial units were controlled by Indian capital. Industries such as sugar, cement, paper, iron and steel were established almost anew by Indian capitalists


Capitalist Response to National Movement in Early Phase

  • Initially, the Indian businessmen kept a political low profile and tended to be on the right side of the rulers for the smooth conduct of their business and industry.
  • They maintained close relations with the British:
    • Through the Bombay Association (formed in 1852), some of Bombay’s businesspeople experienced some amount of political activity and acquired some political awareness.
    • Later during the Ilbert Bill controversy, some of prominent businessmen, led by Jamsetji Jejeebhoy, participated in a big public meeting called by some nationalist leaders such as Pherozeshah Mehta, Dadabhai Naoroji and Badruddin Tyabji on 28 April 1883
  • Thus, despite the display of political awareness and the realisation that the colonial government gave precedence to the British cotton industry over Indian ones, the Indian industrialists were too weak and too dependent on British technology to support Swadeshi Movement
    • As a result, the big capitalists generally remained opposed to the Swadeshi movement.


Mass Nationalism and the Capitalists

  • The responses of the industrialists and the nationalists towards each other can be basically discussed in three phases:
    1. From the Rowlatt Satyagraha to the Simon Commission
    2. During the Civil Disobedience Movement and During the War, and
    3. Finally after the War
  1. From Rowlatt Satyagraha to Simon Commission
  • The mass and agitational phase of nationalism, began in 1918.
    • During this period, the large business houses did not provide any support to the Congress.
    • In fact, many of them actively opposed the movement and for this received favours from the colonial government, including knighthood.
  • Another factor in political inactivity of the industrialists was a series of long labour strikes, particularly in Bombay, led by the Communists.
  • The fear of socialism and violent labour unrest pushed the millowners closer to the government.
  • During the Rowlatt Satyagraha and the Non-cooperation movement very few capitalists made donations for the Congress, and no industrialist signed the satyagraha pledge against the Rowlatt Bills in 1919.
    • On the other hand, the actual support from the business class came from small traders and shopkeepers who generally supported the movement
  • Gandhi was aware that his call for boycott of foreign goods would lead to profiteering by Indian industrialists.
    • But the industrialists did not pay any heed to his appeal.
  • Some industrialists such as Purshottamdas Thakurdas, Jamnadas Dwarkadas, Cowasji Jahangir and C. Setalvad openly opposed the movement.
    • They formed an Anti Non-cooperation Society in Bombay
  • However, from 1922 onwards, the slump in the industry compelled most industrialists to side with the Congress in its demand for protection for industries.
    • At this time, their strategy was to try to influence the constitutionally-minded nationalist leaders to take a pro-Indian industry stand in the legislatures and to orient the Congress to speak in favour of business interests.
    • It was in this period, that the Indian business community established their central organisation called FICCI (Federation of Indian Chambers Commerce and Industry) in 1927.


  1. Civil Disobedience Movement and Quit India Movement
  • Once the depression in the industry set in, the industrialists wanted the government to take strong measures to minimise their losses.
    • The demands of the industrialists included an increase in the duties on imported cotton goods, devaluation of rupee and no preferential treatment for the British cotton industries in Indian markets.
    • But, the colonial government refused to concede any of these demands.
  • Also Indian Industrialists began to fear, that the Colonial Government refused to concede any of their demands
    • For example, the Ottawa Conference held in 1932 privileged the British industries in the colonial markets.
  • Similarly, the decision of the colonial government to link the Indian rupee to the British pound and fix the rupee-sterling ratio, created suspicion in the minds of Indian Industrialists.
  • The disenchantment led to pro-Congress tilt among the industrialists.
    • This resulted in capitalist support for the early phase of the Civil Disobedience Movement.
  • Further, the rise of the Congress left wing and Nehru’s left-leaning speeches further alienated the capitalists from the Congress.
    • They were apprehensive of the Radical forces, and feared that it might work against Capitalism.
  • Their interest in pro-Congress politics was only revived during the late 1930s when the Congress decided to work the Government of India Act of 1935.
  • Later, while during the Second World War many businessmen reverted to a policy of close collaboration with the British authorities in order to benefit from the war orders.
  • Hence the 1930s can be interpreted as:
    • 1930-31: a phase of relative unity
    • 1932-1936: a phase of open split
    • 1936-1939: a new phase of greater unity


  1. Post-War Period
  • Due to the ambivalent attitude of the Indian capitalist class, it never had a decisive influence on the nationalist politics.
  • However, by early 1940s when it was clear that colonial rule would end, the capitalist class veered towards the position adopted by the Congress as was clear in its major policy document, the Bombay Plan, in 1944.
  • As a result, the Indian capitalists, chalked out a plan which supported the role of a national state and planning in initiating and sustaining an independent capitalist development in the country, free from imperial control and providing protection to the national capital against the inflow of foreign capital.
  • The idea of Centrally Planned Economy, as was professed since 1930s by Subhas Chandra Bose, Jawaharlal Nehru received strong backing now, from Capitalist Class.


Mainly driven by Interests and later in furtherance of Freedom, the Indian Business groups’ role kept on changing its form, nature and appearance, according to the demands of the time.