Indian oil industry: a historical study with special reference to the strategic role of government of India

Abstract

Energy is important for any productive system. Oil besides being an energy source, is also an industrial raw material. Oil is vital for industrial growth, economic development as well as for military strength, especially for any under-developed developing nation. Oil is an international industry and possesses certain unique characteristic which implies entry restrictions to the industry. Till 1950 India was importing almost all of its requirements of oil products. But in spite of the restrictive nature of the industry for entry purposes, India by mid-seventies could develop an integrated, transportation and marketing. Earlier works on Indian oil industry have taken politic economic or economic perspective and thus look at the developments in the industry as the outcome of power balance, ideological leanings, or look at the cost-benefit aspects. Also these works evaluate the individual developments with respect to their immediate effects. The present research taking a longer time perspective evaluates the developments in the oil industry in totality. The focus of the present study is on the role played by the Government of India, and therefore, looks at the developments in the industry as the strategy formulation process of the government. In the present study the framework of corporate strategy relating to the strength and weaknesses to the opportunities and throats in the environment, is used, with a historical perspective not only to describe but to explain the events as they occurred in the oil industry. The major findings of the thesis are: 1-The development of the oil industry took place in incremental stops, the options open to the government getting enlarged with each incremental stop. 2-Though on first glance the events looked more like ad-hoc measures, every move had a rationale. 3-The government had a strategic role in the development of the Indian oil industry and the following elements could be identified us forming part of the strategy formulation process: a) Identifying a long-term mission b) Dealing with the futurity of present decision rather than with immediate responses/reactions to the present decisions. c) Constantly watching the environment for threats/opportunities and using the opportunities to reduce the threats. d) Taking risks in uncertain and unpredictable environment. e) Acquiring strengths to be able to react to the environment effectively and to improve the organizations own bargaining power. f) Generating alternatives to widen the base for choices towards achieving the mission.

4- As the government moved from weakness to strength the emphasis of its role shifted from learning to developmental to innovative and so also its strategy from learning to growth to innovation.