Abstract: The Impact of India's Economic Reforms on State-Owned Enterprises: A Company-Level Case Study of Indian Telephone Industries, Ltd.

Dilip Subramanian


An exploration of managerial strategies in the context of radical changes in the business environment is the principle theme of this paper. A state-owned enterprise engaged in the manufacture of telecommunications equipment, Indian Telephone Industries Ltd. lost its four-decade long monopoly access to the domestic market following the economic reforms initiated by India in 1991. The paper will argue that far from instilling greater efficiency in public-sector companies, liberalization on the contrary has resulted only in weakening them. Totally unprepared and ill equipped to withstand the rigors of competition, ITI has come under severe financial strain. Burdened with obsolete technology and an oversized work force, the company's ability to stage a recovery has been further handicapped by continued government control. Management's response to the crisis has embraced the full range of measures from cost cutting to adoption of new technologies to corporate reorganization. Despite these efforts, ITI's long-term prospects for survival remain uncertain.