CII: The Genesis

27 Feb 2020

In 2020, CII completes 125 years of its momentous journey as a preferred and valuable partner of Government, industry and civil society working towards India’s development.

We trace the genesis of CII in 1895 to its evolution as a developmental organisation instrumental in shaping policy, enhancing competitiveness and business opportunities for industry, and working with civil society for India’s inclusive growth and development is being published.

At the start of the 19th century, economic activity in India was vibrant and the country remained a leading global economy. Agriculture, cotton and silk manufacturing were some of the thriving sectors and the country exported key products to Europe, Asia and Africa with a positive trade balance. Indian entrepreneurs were prospering and notable amongst them were Dwarkanath Tagore, Nobel Laureate Rabindranath Tagore’s grandfather and Sir Jamshedji Jeejeebhoy, a wealthy businessman in Mumbai. 

The advent of the British changed the scenario. Under their trade and other policies, indigenous manufacturing and businesses suffered – for example, cotton goods exports from India, which stood at 1.3-million-pound Sterling in 1815, collapsed to less than a hundred thousand pounds, while imports of these goods from England went up multiple times.

By 1837, when Queen Victoria ascended the throne, Indian industry had shrunk, leaving agriculture as the only viable source of livelihood for Indians. Over the next few decades, Indian industry hardly grew in the absence of requisite support from the colonial Government and native business strongholds such as Surat and Murshedabad saw a decline while non-Indian enterprises prospered. 

The Beginning of Industrialisation – the Birth of Modern Factories

Between 1850 and 1880, the colonial Government strengthened its control over India’s economic affairs, building transportation and communication facilities to change the business landscape. Managing agencies – which managed the companies incorporated outside India – grew in numbers and became more powerful with some, such as Duncan Brothers, managing many companies from diverse sectors to promote British interests.

The British continued to focus on deriving economic gain from India and established a strong and extensive railway network which would encourage the planting and processing of crop such as cotton and jute. This led to rise of modern factories in India. 

Thus was India’s industrialisation born.

In 1853, Cowasji Nanabhai Davar established the first cotton mill in India, the Bombay Spinning Mill. The Mill survived the protest by Lancashire mill owners with the support of the textile machine manufacturers of England. By 1895, around 70 mills were operating in Bombay.

Around the same time, jute mills came up near Kolkata, and with a modest beginning of 5 mills in 1869, grew to 38 mills by 1910. Coal mining, iron and steel and the engineering industry emerged too, although in most sectors, British companies dominated with Indian ones in the small enterprises sector. 

The Birth of the Chambers of Commerce

Parallel to the growth of industry, British businessmen felt the need to voice collective concerns and network better and the first Chamber of Commerce came up in 1833 in Calcutta (now Kolkata), which was a hub of economic and cultural activity in East India. The Calcutta Chamber of Commerce, incorporated soon after the Companies’ Incorporation Act, became a force to reckon with and in many ways became a prototype for other chambers of commerce. In 1853, the Calcutta Chamber of Commerce was renamed the Bengal Chamber of Commerce and grew into a powerful body which introduced systems and processes; it is credited with the formalisation of the Managing Agency System, which controlled the interests of the British industry till the 1960s, by establishing a legal framework for the Management Agencies. 

While the Calcutta Chamber of Commerce was British in its structure, the Bombay (now Mumbai) Chamber of Commerce which was established in 1836 included 3 Parsi traders and was the first Chamber of Commerce with Indians as its founding members. This was soon followed by others such as the Madras (now Chennai) Chamber of Commerce. Common to all these were British promoters furthering their economic activity through the Chambers which gave them a common platform to negotiate with their Government. 

Over a period of time, the Chambers emerged as powerful industry voices and were instrumental in shaping policy and bringing about impactful changes.

The Bombay Chamber of Commerce played a seminal role in the infrastructure development of Mumbai, especially the first railway line between Bombay and Thane in 1853, the establishment of the Bombay Port Trust in 1873 and the passing of the India Postage Act of 1854. In fact, it was the force behind the presentation of the Annual Statement by the Finance Minister after 5 pm on February 28, a practice that was followed until very recently. 

The Madras Chamber of Commerce is credited with the construction of the Madras Harbour, facilitating the last leg of the journey of passengers on ships that had to anchor mid-sea and found themselves at the mercy of opportunistic boatmen who charged arbitrary and exorbitant fee to bring them on shore from their mid-sea anchored ships.

While British industry grew and dominated the key Chambers of Commerce, Indian nationalism was growing as was the disappointment with unfavourable British policies and Chambers of Commerce. 

Following the 1857 War of Independence, the British crown assumed formal charge of India and reorganised the governance of the country to strengthen its position. India under the new regime found itself at a disadvantage in economic activity.

The first Indian Chamber of Commerce soon came up. The Native Merchants’ Chamber of Coconada was established in 1885 (it was later renamed the Godavari Chambers of Commerce). Others followed driven by the call for Swadeshi or self-reliance. Notable among them was the Marwari Chamber of Commerce in 1905 and the Southern India Chambers of Commerce in 1909.

Even as these Chambers of Commerce were expanding their reach and influence, the Bengal Chamber of Commerce had introduced an innovative concept – one that would have far-reaching consequences. 

It was the provision to establish sector-specific associations under its patronage. 

Thus, a group of 5 Member companies of the Bengal Chamber of Commerce, all from the same sector, came together to form the Engineering and Iron Trades Association (EITA) in 1895 under the aegis of the Bengal Chamber of Commerce. EITA aimed to promote the interests of the engineering manufacturing sector in the country and worked with the Government of the day for orders for iron and steel and engineering goods to be given to companies based in India as opposed to the prevalent practice of awarding all Government orders to companies based in the UK. 

And EITA evolved, through decades of charting change and enabling development, to finally transform into the Confederation of Indian Industry.

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