A term used to describe regulation of the private sector in
India between 1947 and the early 1990s.
One needed the approval of numerous agencies in order
to set up a business legally.
Result of a mixed economy that used a govt. planning
commission established after independence.
The license raj was largely successful in the 1950s and
after, but eventually lead to low rates of growth and
India began to liberalize its economy in the 1980s ending
the license raj.
Political relations played as an
effective factor in expansion
More Expansion in abroad as
compared to India
Growing governmental intervention in
Low enterprise creation
New enterprises founded during
Much fewer enterprise were launched
than Nehru era.
Example- Nirma Group, Hinduja
Lack of significant development in
structure and strategy
Business leaders were depended more
on intuition and gut feeling than
knowledge based understanding of the
Invested more in foreign collaboration
than R&D and quality
The FERA, 1973
Intended to restrict the inflow of foreign capital into
MNCs were required to dilute their holdings to 40%
in their Indian subsidiaries
Huge increase in PSU than Nehru era.
Further expansion in acquiring private firms.
Lack of requisite autonomy and constant
interference by the Ministries.
Creating employment opportunities for the
sectors neglected by private firms.
Leads to losing the elan of License-Permit raj.