1. Introduction

Following Rungta (1970, Chap. 1), we consider that the “modern business corporation” in colonial India is the same as a joint stock company in this monograph.

Stores are goods purchased by the government for use by its various agencies.

The manufacturing sector in colonial India consisted of a group of mills working under the definition of a “factory” under the Indian Factory Acts. For example, in the case of the Act of 1922, a factory was defined as an entity that “employed 20 or more persons and which used mechanical power” (Sivasubramonian 2000, p. 197).

Factories employed 584,000 employees in a total workforce of 131.64 million in 1900/01. This figure grew to 2.14 million out of a total workforce of 148.43 million in 1940/41.

Here we will focus on the modern business corporation as a driving force of modern economic growth in the manufacturing sector—that is, an “organized (registered)” manufacturing sector in the Indian context—while excluding the sector typically called “the unorganized (unregistered) manufacturing sector.” This does not mean that business corporations in the unorganized sector are not worth investigating. As a matter of fact, the unorganized sector played a significant role in modern domestic and global growth (Piore and Sabel 1984). However, as is suggested by Chandler, Amatori, Hikino and Colli, big business corporations employing capital intensive technologies were the leading actors in the achievement of modern economic growth (Chandler 1990; Chandler et al. 1997; Amatori and Colli 2011). In addition to the modern technology-based textile industry, they were part of the food processing, cigarette making, chemical, petroleum refining, primary metals and transportation equipment industries. In India, these large corporations have continued to contribute to modern economic growth to some extent since the mid-19th century. For example, net value added for the organized manufacturing sector (at 1938/39 prices) grew from Rs. 298 million in 1900/1 to Rs. 2,173 million in 1947/8, while the net value added for the unorganized manufacturing sector increased from Rs. 1,400 million in 1900/1 to Rs. 1,732 million in 1947/8, indicating that growth in the organized sector was more powerful than in the unorganized sector (Sivasubramonian 2000, pp. 293–4).

This view is also shared by Chandra (1966, 1979) and Mukherjee (2002).

Kohli also shares this view, suggesting that during and after the colonial period, the Indian economy failed to grow at a comparable pace with other Asian countries, such as South Korea, because before and after independence, the Indian government was incapable of realizing cohesive central economic planning (Kohli 2004).

This view was also basically shared by Anstey (1929).

Morris writes, “In no decade between 1872 and 1947 did the state’s annual share of GNP average more than 10%; usually it was less than that” (Morris 1983, pp. 553–4).

Interestingly, these two views and two representative paradigms of development economics, economic interventionism and economic liberalism, share a basic understanding of the capacity of the state and the market overall. Details of the development of the two representative paradigms are surveyed, for example, in Meier (1995).

Negative influences of interventionist economic policies have been widely studied. For example, see Panagariya (2008, Chap. 3).

As will be explained in Chap. 2, Japan and India before the early 20th century were, at least, at a similar level of wage-rental ratios.

We must admit that it is occasionally difficult to distinguish the two in actual situations.

Recently economic historians of colonial India have focused on the critical roles played by various sorts of economic institutions and corporate organization when examining the growth of the Indian economy in the colonial period (Chaudhary et al. 2016; Kranton and Swamy 1998, 2008; Roy and Swamy 2016).

Chandler cited the nucleus industries of the First Industrial Revolution to include machine-driven textile industries, the iron industry intensively using of coal and the iron-ship building industry, while noting, “[these industries] lacked the potential for economies of scale comparable to that of the industries of the Second Industrial Revolution” (Chandler 1990, p. 251). Chandler’s core industries of the Second Industrial Revolution comprised oil refining, food processing, mass light machinery production, and electrical equipment manufacturing in the case of the United States, and the production of chemical and heavy machinery, including electrical equipment, steel and electronically produced nonferrous metals, in the case of Germany.

In addition, several studies clarify the development of economic institutions and corporate organization for modern business enterprises of the First Industrial Revolution in colonial India. For example, Goswami (1991), Gupta (2005), Morris (1965) and Kiyokawa (1976, 1983) deal with the jute and cotton mill industries.

According to the works of Angus Maddison and ‘The Maddison Project’, the Second Industrial Revolution had a bigger impact on per capita GDP growth of late industrialisers than the First Industrial Revolution did.

The significance of archival sources based research on colonial India’s business history has been noted by various scholars (Simmons 1984, 1987; Tomlinson 1988).

Issues such as working class consciousness have been intensively studied by historians of subaltern groups, who tend to see failure on the part of India’s industrial labour force to form a functioning united class consciousness, leading to the subsequent failure to organize trade unions capable of successfully negotiating with corporation owners and managers. In her detailed study of TISCO’s labour force during the colonial period, Bahl opposes this view, writing, “The TISCO workers did become class conscious in the sense of their awareness of a common pattern of life, disposition and actions. Based on this consciousness they challenged the prevailing social relations and struggled to change them. In this sense they were successful in creating a class consciousness, though not in a revolutionary sense” (Bahl 1995, p. 405).

Emphasizing a persistent divisiveness existing among the workers at TISCO, we disagree with Bahl’s assessment, while at the same time recognizing that this divisiveness gradually narrowed over time. We think it more constructive to clarify in detail how this slowly narrowing divisiveness persisted under the influence of various aspects, such as factor endowment, government policy and international/domestic market conditions.

Roy (2010, Chap. 5) has noted that such a persistent human resource scarcity was a general feature of labour management systems employed by modern business corporations in colonial India.

Minor contribution of Mysore Iron Works to pig iron production is excluded due to unavailability of data.

Wolcott (2016) has also noted exceptionally high growth in TISCO’s productivity during the colonial period based on an analysis of the company’s labour productivity. According to her analysis, the labour productivity growth achieved by other leading industrial ventures in colonial India, such as cotton mills, was much less than that of TISCO.