CII@125: From EITA to IEA

16 May 2020

By the early 1900s, the Engineering and Iron Trades Association (EITA) had made considerable progress as an association. However, it was getting challenging to balance the interests of the manufacturers and the traders within one association.

During the decades to India’s Independence, Indian industry led by Indians was gaining ground. A new company emerged that catalysed a change in business sentiments as also remained prominent in Indian industry as a stalwart: The Tata Iron and Steel Company, or TISCO, now Tata Steel. 

It was the first major engineering company owned and funded by Indians and its establishment boosted the confidence of the fledgling Indian industry. 

TISCO was founded by Jamsetji Nusserwanji Tata. Unfortunately, he did not live to see his dream come true, but led by his sons, the Tata Iron and Steel Company was born in 1907. Around 8000 Indians put together an impressive 1,630,000 Sterling pounds for shares in this new company. Similarly, other entrepreneurs such as Ardeshir Burorji Godrej too emerged in the challenging industry environment of the day, growing their businesses into conglomerates with an extensive global footprint. But the early years were tough. 

EITA was lying dormant for several years as stated in its Annual Report of January 1911 to April 1912. This could be partly because its focus – stores purchase – was in a limbo since the report on local procurement of stores by the Government was not released and EITA chose not to pursue the matter.

The differences between the traders and the manufacturers had also escalated during the years, and it was decided that given the changing economic landscape, it would be best to focus on manufacturing. Thus, in 1912, EITA changed into the Indian Engineering Association (IEA) without any big announcement. 

TISCO played a key role in driving this change, as is evident from the structure of the newly formed IEA, where TISCO was a key Member of IEA. The umbrella organisation for IEA remained the Bengal Chamber of Commerce which had fostered EITA in its early days and this formidable organisation continued to provide staff and space to the new formation.

IEA soon began work in earnest and lobbied for a favourable procurement policy. A big win for it came when it won a place for itself in the Stores Purchase Committee in 1919. When in 1921 a new Stores Purchase Department was created, independent of the London Stores Department, IEA was vociferous in its protest against the move stating that London Office should be subordinate to the Director General of Stores in India. Partly conceding to their demands, the Government in 1929 declared the order of priority for purchasing stores where the first priority would be given to raw materials produced in India and articles manufactured with Indian raw materials. 

IEA had succeeded in altering the Stores Purchase Policy, thereby establishing itself as an important and impactful Chamber of Commerce.

Its second notable win came with its campaign for tariff protection. Till the First World War, the Government had enforced free trade to disallow any protection to Indian industry. But the war changed everything – the engineering industry delivered; and the Government accepted that the industry had grown large enough to warrant continuity, even if that meant protection. A Tariff Board, appointed in 1923, gave protection to 11 industries in 1939.

The Indian Engineering Association (IEA) had arrived.

Meanwhile, Indian industry was entering a new phase. The partition of Bengal boosted the Swadeshi movement with the number of cotton mills increasing by 39 between 1904 and 1910, but the real boost for Indian manufacturing came with the First World War with the cotton, jute and coal industries benefitting the most. The demand for steel escalated during these years, and TISCO proved to be a dependable and able supplier of steel. The increased demand for power encouraged the Tatas to set up the Tata Power Company.

While the World War raged on, India’s Swadeshi Movement was gaining ground and mass support, fuelled by Mahatma Gandhi’s tours across the length and breadth of the country. The change in sentiment sweeping across the country led the Government to change its stance towards industry in 3 important ways:

Government intervention in industrial development intensified. 
Indian entrepreneurs and entrepreneurship were getting stronger while British Managing Houses and the power they wielded were waning, earning recognition and respect for Indian entrepreneurs from the Government.
Indian manufacturing received a boost since import substitution across industry sectors, especially in the consumer goods segment, was becoming more prevalent.

While Indian industry was finding its feet in this new world, a major game-changer was the entry of multinational corporations in India – the first was a match company from Sweden called WIMCO in 1924, which was followed by Guest Keen, Lever Brothers and Bata Shoe.

Although their primary focus was their businesses, Indian industrialists worked closely with Indian political leaders such as Mahatma Gandhi. They rallied fellow industrialists together to form their own Chambers of Commerce to further Indian interests. GD Birla, Sir Purushottam Das Thakurdas and Fakirji Cowasji set up the Federation of Indian Chambers of Commerce and Industry (FICCI) in 1927, advised by Mahatma Gandhi to help industry contribute in a meaningful way to India’s struggle for Independence. The other notable Chamber of Commerce was ASSOCHAM, which came up in the early 1920s.

While these new Chambers of Commerce were being set up, the older IEA established in 1895 went from strength to strength, becoming the Confederation of Indian Industry in 1992.

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