+ India’s Liberalisation and the Transformation from CEI to CII - CII Blog

By the turn of the decade, around 1990, CEI had emerged as a national-level association instrumental in driving impactful changes across sectors.

India, at that time, was going through turbulent times – the economic emergency necessitated immediate attention and action. The historic reforms of 1991 announced by the then Prime Minister, Dr Manmohan Singh, truncated India’s economic history into two parts: pre-1991 reforms, and post-1991 reforms.

In many ways, this shift was also reflected in the history of the organization: from being an engineering-dominated body, the CEI became a representative all-industry body, and named itself Confederation of Indian Industry (CII), to reflect this new identity, in January 1992.

What culminated in the change in name and focus in January 1992 had been in the making over the last decade.

CEI had been leading the expansion of India’s economy and had found an ally in the young, dynamic leader, Rajiv Gandhi, who, as Prime Minister, was driving liberalization and change, often overturning till-then followed norms. One of the most significant changes he introduced was industry representatives traveling with a Prime Minister on official visits overseas. Mr Rajiv Gandhi insisted that industry representatives accompanied him to Moscow, and thus a group of industrialists from CEI visited Moscow as a part of the Prime Minister’s delegation – a first for an industry association!

In fact, it was from 1984 onwards, when Mr Rajiv Gandhi became Prime Minister, that the relationship between the industry association and the Government started undergoing a tectonic shift. Encouraged by an open-minded and growth-driven leader, CEI took up a stronger position in policy recommendations and interacted constantly with the Government on driving market reforms. It also pioneered the quality movement, even as international engagement shifted gears to move on a different growth trajectory.

With de-regulation and globalization, Indian industry had many changes to adapt to, especially related to technology, finances and management. The speed of change, and the exposure levels, were completely new for Indian industry. As the East Asian financial crisis unfolded in the late 1990s, Indian industry faced several new challenges. The Association helped Indian industry restructure in response to the changing socio-economic landscape and promoted a focus on quality and efficiency to prepare industry to operate and compete in a global economy. Aided by their grounding and strong work ethic, Indian businesses faced these challenging times, and weathered the storm, to emerge as competitive and efficient entities, able to stand firm against global headwinds.

In the July 1991 industrial policy statement, licensing was abolished in all except 18 industries, and the list was further reduced in later years. Measures such as reduction in direct taxes, opening of foreign trade and foreign direct investments, and reduction in import duties were some of the sweeping reforms over the next few years which facilitated the growth and development of industry, and thereby the growth of India’s economy.

The organization had been cognizant of these changes, and had called for many more, so much so that the theme for the Annual National Conference in April 1991 was ‘Challenge of a Free Economy’, several months before the economy became free! In fact, CII’s contribution to reforms has been recognized as stellar contribution, and it continues to lead, especially through its policy advocacy work, to bring about changes conducive to India’s growth and development.

Like the nation, 1991 was a turning point for the association too. The discussions within the organization around a change in name and orientation had been gathering steam once again.  Senior members met in September 1990 and January 1991 and doubts and concerns were freely shared. One major concern was the risk of the organization losing its identity and focus on manufacturing, while not quite emerging as an association representing the national industry.

The simmering issue of a merger of CEI with ASSOCHAM and the subsequent change in the nature of the organization re-surfaced. Differences in culture, the issues related to accommodating public sector enterprises in a chamber of commerce, and the nature of ASSOCHAM’s membership were considered. Eventually, the proposal of the merger was not felt viable.

The National Council Meeting in June 1991, a rationale for the change was presented as follows:

  1. The changed political and economic scenario
  2. The need to strengthen the sectoral industry associations such as IMTMA and ACMA so that these would be increasingly effective without CEI
  3. Several key services/activities were already covering all industry such as taxation, finance, international activities etc.
  4. All the counterpart bodies overseas were national representative industry bodies
  5. Specialist services such as TQM, technical development, community development could be better provided by an all-industry body

The detractors were won over and in January 1992, the Confederation of Engineering Industry (CEI) became the Confederation of Indian Industry, marking a turning point in the history of the association.

CEI, and later CII, was not only driving changes, but also working towards getting widespread support for these changes within industry members and other stakeholders. By 1992, it had engaged with 227 Members of Parliament from 14 States, sensitizing them about the reforms; an endeavor which served the country very well given the rapid political changes after the mid-1990s. The continuity in understanding and taking forward the reforms process was due, in no small measure, to these efforts.