Shiv Nadar on Licence-Raj Strategy

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.

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.

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.