CASE ANALYSIS: ITC IN RURAL INDIA * GROUP K2

INDIAN CONTEXT:
India is a secular state, majority being Hindus. A large chunk of the Indian population still continues to live in the rural areas, their major occupation being agriculture. After independence, Indian economic strategy favoured production of capital goods which lead to development of industrial base. Private sector had to obtain manufacturing licenses for other industries
With changing times and conditions, various economic reforms were introduced. Tracing back to 1973, Government asked all the multinationals to dilute foreign equity to 40% except under special circumstances. Many multinationals left the country, yet a few others continued by using the benefits available. The advantages with respect to the demographics were low cost labour, abundance of technically trained staff.
By eighties, India had a good industrial environment with respect to the standards of the developing countries. The government control and restrictions was still very high. With the use of new seeds, fertilizers, pesticide and irrigation methods, India became self sufficient in food.
India had a very strong Informal or Unorganized sector mainly cottage industries as they were exempted from many restrictions as compared to large or organized firms.
Organized sector Labour unions were very strong in India and were politically active.
By 1990, GDP was 3.5%, which was largely limited because of the stringent policies of the Indian government. Inflation was greater than 15%. India was under large amounts of debt. International Monetary Fund (IMF), demanded for economy liberalization when approached for help. The then, finance minister reduced the economic controls and opened economy to imports and FDI.
From 2000 onwards, Indian economy has been performing positively. FDI inflow has increased considerably.
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