Tata Group

1. The Tata Group has transformed from a risk averse, Slow moving giant into a more dynamic and aggressive conglomerate.

a) How much of such transformation can be attributed to one individual?

The transformation of Tata Group into more dynamic conglomerate could be attributed to economic transformation in India. Until 1991 the Indian economy was virtually closed to foreign investment. The government levied high import tariffs on foreign goods. The Monopolies and Restrictive Trade Practices (MRTP) Act, which was passed in 1969, became an impediment for multinational companies operating in the country to expand their Indian operations (Bhattacharyya and Rahman, 2003). Direction of economic policies in India started changing from mid-1980s when the government started initiating industrial and trade deregulation measures (Basu, 2007). However, these unplanned and to a certain extent, random measures resulted fewer benefits and foreign exchange reserves gradually exhausted (GOI, 2005). The crisis reached its peak in 1990 when the Indian Government had to approach the IMF for assistance. As a loan condition, the IMF-World Bank prescribed the so-called stabilization and structural adjustment programmes that resulted in India’s “New Economic Policies” in 1991 (Dutta, 1998). Since, then the Indian economy has undergone substantial changes with comprehensive liberalization measures in every sector of the economy.

The reforms undertaken by the Indian Government in 1991 have resulted in an increase in the economic growth rate as well as the inflow of FDI. Average annual rate of growth of real GNP jumped from 3.3% during 1990-1992 to 6.8% during 1992-1997 (Basu, 2007). The GDP rose significantly from 1.2% in 1970’s to 7% in 2010 and forecasted to double in less than 20 years. Its GDP growth was at nine percent per year in 2007, but in 2008 it slipped to less than seven and a half percent and in 2009 it fell to six percent, making it the world’s 12 fastest growing economy...