Page 61 - DMGT401Business Environment

Business Environment

Notes India is also becoming the back office of the world as more and more countries are shifting their
back office work to India. New employment opportunities have been generated in the new
economy industries like telecommunication, software, call centres, biotechnology, education,
media, etc. Because of increasing competition, the quality of produced goods has improved.
Earlier India produced substandard goods, now it is setting the benchmark.
Critics says that there is no evidence of positive growth rate after liberalisation as the growth of
industrial production fell from 7.8% per annum in the pre reform period (1980s) to 6.6% in 1990s.
But the decade of 1990s was a decade of transformation and a process, which takes time. There is
a great difference in the quality and level of production of the 1980s and the 1990s.

The biggest criticism of the NIP is MNCs may soon take over Indian companies.

Example: This is true to a certain extent-Coca Cola acquired Parle, Pepsi acquired Uncle
Chipps, HLL acquired Modern Bread, Lakme, TOMCO, Kissan etc.
But this is only one side of the picture. On the other side, many Indian firms also acquired MNCs.
Videocon recently acquired the picture tube plant of Thomson and the Indian arm of Eletrolux.
Asian Paints also acquired Berger International. Although this threat is true to an extent because
it is very difficult for Indian firms to compete with MNCs' financial strength. India has moved
from too much protection to too little protection.

Task Make a note of all items possible that were affected by the New Industrial
Policy. Also make a note of the companies that gained and that made losses
due to this policy.

2.3 Stock Exchanges

The emergence of Capital Markets can be traced back to the second half of the eighteenth century
when the transactions were limited to loan stock transactions of the East India Company. By
1830, some corporate stocks had emerged due to the economic boom and establishment of
textile mills. A Stock Exchange means any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of buying, selling
or dealing in securities.
The Bombay Stock Exchange was formalised in 1875 with the establishment of 'Native Share and
Share Brokers Association'. The stock exchanges of Calcutta and Chennai were established in
1908 and the Delhi Stock Exchange in 1947. There are 23 stock exchanges in India and their
organization varies. Some are public limited companies (15), while others are limited by
guarantees (5) or are voluntary non-profit making organizations.
In the period of 1994-1995, the number of stock exchanges went up from 7 to 22. In March 2000,
the number of stock exchanges increased to 23 with the formation of Inter Connected Stock
Exchanges of India Ltd. (ICSEL), the number of listed companies from 1125 to 9477, the market
value of listed companies from 971 crore to 6,39,575 crore.

2.3.1 Definition of Stock Exchange

Under the SCR Act, an exchange is defined as any body of individuals, whether incorporated or
not, constituted for the purpose of assisting, regulating or controlling the business of buying,
selling or dealing in securities. The SCR says that a stock exchange must be recognised by the
government.

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