The Role of family businesses in India’s Growth
India has long been known as the land of entrepreneurship. Our country which is in its 75th year of independence has been able to achieve this title because its growth has been fuelled by multiple family businesses in the last few decades. Huge family businesses like Reliance and Adani contribute a lot towards building the nation. They are one of the highest taxpayers in the country and their businesses offer a wide range of affordable products and services for the common man of India. Most importantly, these family businesses are the largest employers in the country.Â
An increase in employment generation has a direct link with national growth. As more people get employment, they become taxpayers and they also start spending more. Once spending increases, money keeps circulating in the market, and the economy booms. Multiple large family businesses also have tie-ups with international organizations and they also export many products to multiple countries this helps India in garnering respect from all across the globe.
Family businesses that have seen success spanning decades also set an example for other small and medium enterprises in the country which families run. SMEs can learn from huge family businesses not just how one can create a good business but also how a business can sustain itself over many decades and create a legacy. As a result of operating for multiple years, these businesses have huge amounts of capital which are used for nation-building.Â
Family businesses have two essential assets which other businesses lack – one, an excessive amount of capital, and two, many years of experience in understanding the Indian market. It is because of this that family businesses can sell affordable products that middle-class people in India can buy and at the same time these businesses can make profits. One classic example is that of Jio telecom services rolled out by the Reliance group. The use of the internet in India, especially in tier 2 and tier 3 cities has increased after cheap internet services were offered by Jio.
When India was severely hit by the Covid pandemic, the Serum Institute of India (SII), another family-owned business operated by the Poonawalla group came to the rescue by developing Indiaâ€™s first indigenously developed Covid-19 vaccine- Covishield. The Poonawalla group has been developing and manufacturing vaccines for 50 years. This family business has been protecting people all across the globe against life-threatening diseases. The preceding two examples of the Reliance group and the Poonawalla group tell us how important family-run businesses are in India and how much they have contributed towards national growth.Â
Another family business that has thrived in India is the Aditya Birla Group. It was established in the year 1857 and today after 165 years, it is still one of the most successful businesses that India has ever seen. Surviving for more than hundred and fifty years and handling multiple businesses cutting across verticals such as cement, textiles, mining, chemicals, and engineering is not easy. The Aditya Birla group has proven that a business can stand the test of time if there is clarity in thought and effectiveness in action.
Family-owned businesses have been present in India for ages. After 1990, the Indian economy opened up to the world, and because of this huge foreign companies entered the Indian market. The competition faced by Indian family businesses increased but effective strategies and good decision-making processes helped these businesses face their competitors with ease. Family-owned businesses have been successful in India also because they have been able to pass responsibilities from one generation to another in an effective manner. This has been possible because the new and young generations within families have been able to take forward the business keeping in mind the mission of the company and at the same time have adopted changes that were required to sustain growth.
Â According to an article published by Business Today in 2019, family businesses contribute to 70% of Indiaâ€™s GDP. This indeed is a huge number. Looking at how family businesses have performed in the country, other SMEs which are run by families must be encouraged by the government. India is on its path to becoming a 5 trillion dollar economy and it couldnâ€™t have been possible if it werenâ€™t for family businesses.Â