Industrialist Naushad Forbes says the 1991 reforms transformed Indian business, but warns that rising non-tariff barriers, excessive regulation and weak private-sector R&D are holding back the next phase of growth.
Naushad Forbes says the India his father faced in the 1970s and 1980s was one in which business fortunes were shaped less by managerial skill than by policy approvals, permits and protection. In an interview with Business Standard, the industrialist argued that firms then had to navigate a system where individual favours and government permissions often mattered more than efficiency, and he recalled how one proposed joint venture to make pH electrodes was blocked despite his belief that the product could have been built competitively in India.
That backdrop helps explain why the 1991 balance of payments crisis became such a watershed. Business Standard has previously reported that the crisis pushed India into a far-reaching turn towards liberalisation, privatisation and globalisation, ending the old inward-looking model built around import substitution and licence-based control. Economic analyses of the period describe how the New Industrial Policy dismantled much of the License Raj and opened the door to foreign investment, setting the stage for a more market-oriented economy.
For Forbes, the change was not abstract. He said Manmohan Singh’s budget speech in 1991 forced his family business to rethink what it should make, what it should import and how it should compete. The conclusion was that only some of their products would remain viable once tariffs fell and imports became easier, so the company allowed weaker lines to fade while investing in proprietary technology and overseas markets. What began as a learning exercise in Southeast Asia, West Asia and East Africa later became, in his view, an important source of strength in its own right.
Forbes also linked the broader gains after reform to the wider economy. He said growth improved markedly after the reforms, even though the first couple of years were difficult and industrial conditions took time to stabilise. By the mid-1990s, he said, expansion had accelerated, and after another pause in the late 1990s, momentum returned in the early 2000s and remained strong for much of the next decade.
He has long argued that the direction of reform matters more than the size of government. Forbes said India’s history suggests that weaker governments have often been better reformers than stronger ones, citing the minority government led by P.V. Narasimha Rao as the administration behind the most sweeping change the country has seen. He contrasted that with the decades of control and regulation imposed under Indira Gandhi, which he said created many of the distortions later dismantled in the 1990s.
At the same time, Forbes warned that India has not built on that opening as consistently as it should have. He said tariff cuts slowed after 2016-17 and were increasingly replaced by non-tariff barriers such as quality control orders, which he views as protectionism by another name. He also said the country’s trade strategy still needs to engage more deeply with Asia and Africa, whether through regional pacts or broader participation in agreements that can widen market access.
His criticism extends well beyond trade. Forbes said the government’s focus on improving ease of doing business was welcome, but too much attention fell on starting a business rather than running one. He argued that many sectors remain over-regulated, including higher education, where he believes outcomes should be made public and institutions given far more freedom over degrees, leadership, staffing and fees. In his view, repeated regulation has often produced little real improvement.
Forbes also said India’s weak manufacturing share in gross domestic product is closely tied to low private research and development spending. He pointed to figures showing that Indian firms invest about 0.3 per cent of GDP in in-house R&D, far below a world average of 1.5 per cent, and argued that industry itself must do more to build technology depth. Protection, he said, only encourages companies to avoid competition rather than win in global markets.
That same logic, he said, applies to private investment more broadly. Forbes believes businesses expand when demand is strong, capacity is tight and new opportunities emerge, but he said domestic consumption has been subdued for years and job creation has been too heavily concentrated in agriculture. He called for stronger support for workers moving into more productive sectors, better protection for gig workers and fewer barriers to exports and modern industries such as electronics, renewable energy, nuclear power and defence.
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