How did the establishment of the factory affect existing Indian companies and the Indian economy?
India's process of industrialization is similar in some ways to that experienced in most other countries that have made the transition from a primarily agriculture-based economy to an industrial one. As with those other countries, industrialization will help the Indian economy to grow, while providing employment for its huge workforce, higher standards of living, and will make India a more powerful presence in the international arena.
India has over one billion people. It is second only to China for largest population in the world. It also has tremendous poverty with very wide income gaps, poor sanitary practices, a Maoist insurgency in a major region of its country, and serious religious divisions between majority Hindus and a minority, but still very large, Muslim population. It is, in short, a very complicated country. It also has major infrastructure problems -- a serious liability for a country the size of India -- and increasing tensions between landowners and corporations eager to build on that land.
Despite its obstacles, most Indians firmly believe in the necessity of continuing to industrialize. Only through industrialization will India be able to assert itself regionally and be able to develop, build, and maintain the advanced weaponry it believes it needs to confront China and Pakistan, its two main rivals. Consequently, industrializaton will push forward in India.
The effect of industrialization on India's economy has been alluded to already: it will help the overall economy to grow enormously. The effect on individual companies or categories of companies, however, will involve the same kind of economic dislocation that other industrializing countries experienced. There will be winners and losers. Winners will be those city-dwellers who enjoy the benefits of urban modernization that should be expected to accompany industrialization. Assuming India can continue to train its undereducated rural population, it will see an increase not just in overall Gross National Product, but in individual incomes as well. That is a big assumption, though, that Indians may struggle with for many years. Barring success in that area, it will lack the skilled labor force necessary to advance its economy.
Losers in India's drive for industrialization will be the farmers and poor villagers evicted from their land to make way for manufacturing facilities. Small business -- the backbone of most modern economies -- will need to adapt to the scale of changes occurring in the India, including the competition that will invariably come from larger, newer businesses.
The biggest losers today, however, are the entire population, who live in an increasingly polluted country. Air and water pollution in Indian cities is alarmingly high, and unlikely to improve anytime soon.
India has corruption issues that, combined with its caste system and rampant poverty, makes it a difficult environment in which to do business. At some point, Indian businesspeople, as well as foreign companies doing business in India, may very well tire of the corruption that adds to the cost of doing business while slowing progress.