Licence Raj

Between the 1960s and the early 1990s Rahul Bajaj did not merely run an automobile company — he made the Bajaj Chetak scooter the visual shorthand for middle-class aspiration in post-independence India. Families booked the scooter and then waited, on average, ten years and sometimes as long as fifteen, because the rigid License Raj quota system capped monthly factory output well below genuine consumer demand.

From 1950 to 1990 Indian industrial growth was throttled by government quotas and approval regimes; a factory was legally permitted to produce only a fixed number of units each month regardless of multi-year waiting lists. Bajaj repeatedly petitioned Delhi to raise Bajaj Auto's manufacturing cap, arguing on economic, moral and employment grounds, but bureaucrats kept the ceilings in place for years.

Faced with quota rigidities, Bajaj chose to deliberately exceed licensed production to meet genuine consumer demand — and was hauled before the Monopolies and Restrictive Trade Practices (MRTP) commission with the technical threat of imprisonment. When the judge asked whether he was prepared to go to jail, he reportedly invoked his grandfather Jamnalal Bajaj's nationalist jail time, and the case was ultimately dropped.

HCL was founded in 1976 with an initial investment of roughly INR 187,000 — a small sum even in the India of the licence raj — pooled together by Nadar and six colleagues (including Ajai Chowdhry and Arjun Malhotra) who had previously been building and selling teledigital calculators through a partnership venture called Microcomp.

After The Coca-Cola Company exited India in 1977, Parle Exports entered the carbonated drinks segment with Thums Up (cola), Limca (lemon-flavoured) and Gold Spot (orange-flavoured). To complement its soft drinks portfolio, Parle launched mineral and carbonated water under the Bisleri brand name — the first time the water business was commercially pursued, in PVC bottles initially, switching to PET in the mid-1980s.

His first venture, Softronics, closed around 1976 because India simply had no software market at the time — few computers existed and the government refused to outsource. The failure taught him that demand-side conditions mattered as much as engineering talent, a lesson he carried into the timing of the Infosys launch five years later.

Ramkrishna Bajaj (1923-1994) was the younger son of founder Jamnalal Bajaj and steward of the Bajaj Group through the licence-raj decades, the period in which Bajaj Auto became the dominant Indian two-wheeler maker under the protected market of the era.

Om Prakash Jindal (1930-2005) founded the Jindal Group from a single pipe-manufacturing unit in 1952 and built it into a vertically integrated steel-and-power house, with the operating businesses later split among his sons into JSW, Jindal Steel and Power and other entities.

The early decision to focus on downstream steel products — pipes and tubes — rather than upstream steelmaking, was a function of the licence era's capital constraints, and produced a group whose first scale came from specialised manufactured goods rather than commodity steel.

The decision to commit the group's manufacturing capacity to scooters and two-wheelers under the licence regime positioned Bajaj Auto as the volume incumbent that post-liberalisation entrants (Hero Honda, then the Japanese majors) would have to displace, an incumbent position it held for over a decade after 1991.

The fertiliser and viscose investments, made through Zuari Agro and Century, were the licence-era industrial base on which the branch scaled, chosen for their capital intensity and policy-protected returns rather than for consumer-facing growth.

The Premier Automobiles venture, begun in collaboration with Chrysler in 1944, established the first Indian-owned car-assembly operation, a template for the licence-era joint-venture pattern that dominated Indian auto manufacturing through the 1980s.

Born 10 June 1938 in Calcutta, Rahul Bajaj inherited a business lineage as the grandson of Jamnalal Bajaj, the merchant-philanthropist who was a close confidant of Mahatma Gandhi. His father Kamalnayan had already diversified the family enterprise into scooters, cement and electrical equipment, handing Rahul a portfolio rather than a single-product firm. The Gandhi connection and the family's nationalist legacy would shape his public posture as an industrialist who openly defied state controls.

Bajaj chose to relocate the company's base from Mumbai to Akurdi, then a rural and underdeveloped area near Pune, in pursuit of government incentives available for setting up factories in backward regions. The decision meant living without basic urban amenities for years, but it turned Akurdi into one of India's most prominent industrial corridors and seeded a locally-rooted manufacturing culture.

Rahul Bajaj took charge of the Bajaj Group in 1965 at the age of 27, inheriting an auto operation throttled by License-Raj capacity permits. Over the next five decades he scaled the flagship Bajaj Auto from roughly ₹7.5 crore in turnover to ₹12,000 crore, with the Chetak scooter carrying the lion's share of that growth during the 1970s and 1980s when waiting lists stretched for years.

In the 1950s the Italian Piaggio Vespa became a cult two-wheeler in India, assembled and distributed under license by several Indian firms including the Bajaj Group. As an undergraduate at St. Stephen's College in Delhi, Rahul Bajaj himself rode a Vespa to campus — a personal detail that underscores how the eventual Chetak was a domestic successor to a foreign icon he had grown up using.

In 1971 the Indira Gandhi government declined to extend the international collaboration agreement between Piaggio and Bajaj, abruptly severing Bajaj's access to Vespa technology and tooling. The forced decoupling pushed Bajaj Auto to design and manufacture an indigenous scooter — a geopolitical shock that unintentionally seeded the Chetak and the 'Hamara Bajaj' brand identity.

The very next year, 1972, brought a second shock: the sudden death of Kamalnayan Bajaj placed the entire industrial conglomerate's responsibility on thirty-four-year-old Rahul's shoulders. He had to consolidate operational control across auto, electricals and cement businesses at exactly the moment the Piaggio tie-up had ended — a crucible that defined his leadership style.

With Piaggio out of the picture, Bajaj Auto launched three scooter models in quick succession — the Bajaj 150, the Bajaj Chetak and the Bajaj Super — each engineered and produced domestically. The Chetak, named after Maharana Pratap's legendary horse from Mewar, became the breakout hit, embedding itself so deeply in middle-class aspiration that even second-hand units commanded a premium.

Under the License Raj regime a company was permitted to produce only up to 25 percent above its licensed capacity; Bajaj Auto hit this ceiling even as orders stacked up to a ten-year delivery backlog. Rahul Bajaj was summoned by the Monopolies and Restrictive Trade Commission for the 'crime' of producing more scooters than his industrial license allowed, a moment he later recounted in the book Business Maharajas by Gita Piramal.

Bajaj served as president of the Confederation of Indian Industry (CII) twice — in 1979–1980 and again in 1999–2000 — making him one of the few industrialists to lead the apex lobby group across two distinct economic eras, the late License Raj and the post-1991 reform phase. In 2017, then President Pranab Mukherjee presented him with the CII President's Award for Lifetime Achievement.

At the MRTP hearing, a competing manufacturer — Automobile Products of India's chairman M.A. Chidambaram — tried to disparage the Bajaj scooter by noting that his Lambretta weighed 100 kg versus Bajaj's 94 kg. Rahul Bajaj, defending himself without counsel, reportedly replied that 'the Lambretta is 100 kg of silver but the Bajaj scooter is 94 kg of gold,' turning the comparison into a branding coup; the commission permitted the expansion.

The image of an Indian family of four balanced on a Bajaj scooter became the defining visual of the 1980s and 1990s urban middle class, used for school runs, commutes and weekend outings. The scooter was less a vehicle than a household asset class, treated as a prize possession and sometimes a dowry item, with resale values sustained by the unmet decade-long demand.

The 'Buland Bharat, Buland Bajaj' advertising tagline — popularised as 'Hamara Bajaj' — embedded the brand into the nationalist imaginary of the License-Raj era, positioning a scooter as a symbol of self-reliant India. The campaign became one of the most durable pieces of Indian advertising, surviving even as the product portfolio pivoted from scooters to motorcycles after 2001.

He recalled India's early-1980s business environment as extremely hostile, with Infosys waiting a year for a telephone connection and three years for a licence to import a single computer. He quipped that half the country was waiting for a telephone and the other half for a dial tone — a wry summary of License Raj-era friction.

Murthy admits to having had history on his side — successive Indian governments, regardless of ideology, kept expanding technical education output. That policy choice, made for nation-building reasons, accidentally created the exact talent pool on which Infosys and its peers could later build a globally competitive services industry.

In a 2006 Wharton interview Nadar framed HCL's beginning at DCM's calculator division, where he and fellow engineers noticed that the programmable calculators of the day were the forerunners of personal computers; convinced they could build an eight-bit machine, they pitched the idea to India's Electronics Commission, which asked them to write a feasibility report.

Nadar told Wharton that HCL's hardest early hurdle was not designing computers but obtaining government permission to make them — a classic licence-raj bottleneck he solved by entering a joint venture with the state of Uttar Pradesh, which had been granted approval and could sub-permission to the new company.

Murthy defined entrepreneurship as the courage to convert a powerful idea into wealth. He told YaleGlobal that the 1981 environment in India was deeply hostile to business, but that Infosys rode two parallel shifts: the falling cost of computing power unleashed software demand, and the globalisation paradigm made sourcing talent across borders acceptable.

Nadar disputed the popular version that IBM was 'evicted' from India in 1977; he told Wharton that IBM actually withdrew over a government rule requiring source code to reside in India and a foreign-equity dilution requirement — clarifying that HCL did not benefit from a competitor's forced exit but rather lost the market-creation partner IBM had been.

Murthy recalled the early 1980s pains: it took Infosys a year to get a telephone line, and two years to secure a Delhi licence to import a fifty-thousand-dollar computer. The stack of obstacles convinced him that if Infosys wanted to grow, it had to fight the system through alternative routes — including building relationships with multinationals willing to bring in equipment themselves.