There was a time when an HMT watch marked life’s milestones, gifted at graduations, worn at weddings, trusted for many years. However when quartz expertise reworked world timekeeping, HMT stayed targeted on refining mechanical precision moderately than redefining relevance. The warning indicators have been clear: between the early 2000s and 2013, watch division revenues fell from over ₹100 crore to single digits, whereas cumulative losses crossed ₹1,600 crore. HMT remained operationally energetic, EBITDA-targeted lengthy after its strategic ambition had stalled.
The story is not distinctive.
As soon as a market chief in shopper electronics, Videocon expanded aggressively into oil & fuel, telecom and monetary companies. However these capital-heavy bets lacked ecosystem coherence and integration. As leverage mounted, money flows lagged. By the time insolvency proceedings started, creditor claims had crossed ₹60,000 crore.
These weren’t firms quick on capital, model fairness or ambition. They faltered as a result of innovation was delayed and in quick-shifting markets, delay compounds irrelevance.
That is the central warning of “BUSINESS INNOVATION: An Crucial for Indian Family-Led Enterprise,” a report by the Centre for Enterprise Innovation and the Thomas Schmidheiny Centre for Family Enterprise at the Indian Faculty of Enterprise.
Development With out Reinvention?
Family-owned businesses contribute over 75% of India’s GDP — a determine projected to rise to 80–85% by 2047 — and dominate sectors from manufacturing and healthcare to FMCG and infrastructure. But development past a handful of huge conglomerates stays uneven.
Whereas giants equivalent to Tata Consultancy Providers, Reliance Industries, Adani Enterprises, Wipro and Bharti Airtel have clocked sturdy development, many mid-sized family businesses have lagged — regardless of India’s 8% GDP growth and double-digit development throughout healthcare, FMCG, automotives, BFSI and shopper electronics. Rising city consumption and accelerating expertise adoption have created tailwinds, however a lot of this chance stays beneath-leveraged.
Interactions with founders in the research recommend the constraint is not capital or demand, however risk urge for food. As world functionality centres broaden quickly and competitors for expertise and market share intensifies, the benefit will lie with those that construct ecosystems, enter adjoining classes and experiment with new fashions. Operational self-discipline constructed previous success however in at the moment’s setting, resilience with out reinvention dangers changing into rigidity.
The report’s central argument is clear: the biggest risk to family businesses is not daring experimentation, however strategic inaction.
Innovation Is No Longer Optionally available
Innovation at the moment is not about adopting modern applied sciences. It is about rethinking enterprise fashions, buyer engagement and ecosystems.
Corporations which have embraced reinvention present what this seems like in follow. Nykaa blended influencer advertising and marketing, offline retail and augmented actuality to construct an built-in magnificence ecosystem. Apollo Hospitals scaled AI-pushed consultations and diagnostics nationwide, whereas TVS Motor Firm accelerated its EV push by speedy launches and expertise integration. In every case, innovation was contextual responding to shifting shopper expectations moderately than defending legacy codecs.
Drawing on detailed evaluation of 10-yr annual experiences, media interactions and face-to-face discussions with promoters throughout 19 family businesses, the report distils these learnings right into a sensible playbook: the ARISE framework.
A – Ambition: Look Past EBITDA
Sustained development begins with daring, lengthy-time period imaginative and prescient moderately than quick-time period margin safety. IndiGo signalled class management with a 500-plane order in 2019, staking declare to future demand. Dr. Reddy’s Laboratories moved past generics into biosimilars, reshaping its world portfolio.
R – Actual Risk: The Risk of Inaction
Development requires calculated bets. Biocon invested in a biologics facility in Malaysia to strengthen its world provide chain. Eicher Motors deepened digital engagement throughout COVID, strengthening buyer relationships at a second of disruption.
I – Innovation: Tailor for Context
Innovation is about relevance, not hype. Thermax deployed distant instruments and digitisation to enhance industrial effectivity, whereas Nykaa constructed an omnichannel magnificence platform grounded in shopper behaviour.
S – Velocity & Scale: Construct Quick, Study Quicker
In unstable markets, velocity itself turns into a aggressive benefit. Apollo Hospitals swiftly scaled AI-led consultations, diagnostics and digital platforms throughout India, whereas TVS Motor Firm launched two EVs inside a yr, combining good expertise with speedy iteration to remain forward of the curve.
E – Ecosystem Considering: Go Past Merchandise
Enduring benefit comes from platforms and partnerships. Bajaj Auto co-created bikes with KTM and built-in EVs with servicing by ProBiking retailers. Dabur expanded into wellness tech through WhatsApp Ayurveda and strategic e-commerce tie-ups.
The GCC Wave: Menace or Alternative?
One in all the most important structural shifts confronting Indian family businesses is the rise of International Functionality Centres (GCCs).
As soon as again-workplace models, GCCs have developed into innovation hubs driving AI, automation, superior analytics and R&D for world multinationals. As Finance Minister Nirmala Sitharaman just lately famous, India’s GCC ecosystem in 2025 generates an estimated $68 billion in gross worth addition about 1.6% of GDP. By 2030, that determine is projected to achieve $100–200 billion, contributing 3–5% of GDP and materially altering India’s financial composition. India now hosts over 1,900 GCCs using practically 1.9 million professionals, with projections to achieve 2.8 million by FY2029.
This surge creates a expertise conflict notably in six main metros the place over 70% of GCCs are concentrated.
For family businesses, the implications are double-edged.
On one hand, competitors for digital and AI expertise is driving up salaries and attrition. Many legacy enterprises wrestle with slower resolution-making cycles, decrease R&D depth and fewer agile innovation cultures, making it tougher to draw prime-tier expertise professionals.
On the different hand, the spillover results are important. As GCCs deepen India’s capabilities in AI, automation, cybersecurity and subsequent-era provide chains, family-run enterprises achieve entry to a far richer digital expertise ecosystem. Some conglomerates together with Financial institution of Baroda, Adani Group and Tech Mahindra — have already established captive digital centres to speed up inner transformation and embed Business 4.0, AI-pushed advertising and marketing and digital commerce into legacy operations.
The strategic selection, subsequently, is not confrontation however convergence. Family businesses possess enduring strengths: deep buyer loyalty, final-mile distribution, diaspora linkages and powerful product improvement ecosystems. By combining these benefits with GCC-enabled digital capabilities knowledge-pushed personalisation, AI-powered provide chains and world e-commerce platforms they will scale throughout the International South and developed markets alike.
In that sense, the GCC increase is not merely aggressive strain. It supply family businesses a uncommon alternative to fuse legacy with innovation. If leveraged nicely, they might help Indian enterprises transfer from defending home dominance to constructing world scale.
The essential query:
Will family businesses see GCCs as rivals or as gateways to reinvention?
The R&D Deficit: Underinvestment in the Future
Maybe the most sobering perception in the report is round R&D.
Indian family businesses sometimes spend beneath 0.3% of revenues on R&D, in comparison with 2–4% amongst world MNCs and GCC-pushed corporates.
Traditionally, many enterprise households performed a nation-constructing position by establishments equivalent to the Tata Institute of Basic Analysis, BITS Pilani, and the Indian Institute of Science.
Whereas a number of Indian conglomerates have used startup acquisitions to speed up innovation — equivalent to TVS Motor Firm buying Norton Bikes and Swiss E-Mobility Group, and Reliance Industries investing in AI ventures like Haptik and Addverb — lengthy-time period management in deep-tech calls for affected person capital and powerful lab-to-market ecosystems. That is the strategic alternative earlier than India’s family businesses in an AI-first world.
The report recommends the following manner ahead:
- Construct regional innovation clusters anchored round main institutes equivalent to IITs, IISc and BITS, with structured trade–academia collaboration
- Create sector-targeted Schooling and Analysis Zones inside or alongside industrial parks — particularly in healthcare, infotech and digital provide chains.
- Undertake joint R&D funding fashions, enabling corporates to co-spend money on shared labs, infrastructure and analysis expertise aimed toward fixing actual-world manufacturing, shopfloor and logistics challenges.
- Institutionalise school alternate and company immersion programmes, permitting professors and trade leaders to maneuver throughout academia and enterprise.
- Set up a Nationwide Institute for College Growth and strengthen India-targeted knowledge portals to boost analysis high quality, accessibility and proof-primarily based resolution-making.
The Fork in the Street
Indian family businesses stand at a decisive fork in the street. The cautionary tales of HMT and amongst others present that delay, not disruption, is usually the actual hazard whereas examples like Thermax and Nykaa amongst others show how legacy might be strengthened by disciplined innovation and operational agility. In the decade forward, relevance will belong to not the greatest, however to the boldest: these keen to align ambition with reinvention. The best risk now is not change it is standing nonetheless.
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