"How economic liberalisation reshaped Indian brand survival and decline"
Import-substitution industrialisation (ISI)
a policy model that restricts imports and foreign firms to develop domestic industry behind protective barriers.
Brand equity
the commercial value a brand name carries beyond the physical product, built through consumer recognition and loyalty over time.
India's consumer goods market was shaped for decades by the import-substitution industrialisation (ISI) model. Under this framework, the government restricted foreign brands and multinational corporations from operating freely. Domestic firms in automobiles, consumer electronics, soft drinks, and two-wheelers grew behind this regulatory shelter without facing global competition.
The Foreign Exchange Regulation Act (FERA), 1973 was a key instrument of this era. It compelled Coca-Cola to exit India in 1977 rather than dilute its equity stake. This created a market vacuum that domestic soft-drink brands filled through the late 1970s and 1980s. Brands like Campa Cola, Gold Spot, and Limca became household names precisely because global alternatives were absent.
The 1991 economic reforms dismantled much of this protective architecture. Licensing requirements were abolished, import tariffs were reduced, and foreign direct investment norms were liberalised. Multinational corporations re-entered Indian markets with superior technology, global supply chains, and aggressive pricing. This structural shift exposed the competitive limits of many Indian brands that had thrived under protection.
A brand's survival depends on maintaining a defensible value proposition, the specific combination of price, quality, and identity that makes consumers choose it over substitutes. When the environment around a brand changes, that value proposition can erode quickly.
Several distinct mechanisms drive brand decline. Income-driven substitution occurs when rising consumer incomes allow people to trade up to better products. Luna, the moped that once served families and small traders, lost its reason to exist as incomes grew and motorcycles became affordable. The product was not inferior in absolute terms; it was simply overtaken by what consumers could now aspire to.
Regulatory-shelter collapse is a second mechanism. Gold Spot and Citra existed because Coke and Pepsi were absent. Once the 1991 reforms allowed multinationals back in, these brands had no genuine competitive advantage to fall back on. …
Other things remaining unchanged, market demand for a good might increase if:
1.price of its substitute increases
2.price of its complement increases
3.the good is an inferior good and income of the consumers increases
4.its price falls
Which of the above statements are correct?
Consider the following statements:
The effect of devaluation of a currency is that it necessarily
1.improves the competitiveness of the domestic exports in the foreign markets
2.increases the foreign value of domestic currency
3.improves the trade balance
Which of the above statements is/are correct?
Which of the following best explains why Coca-Cola exited India in 1977?
With reference to India's consumer goods market, consider the following pairs:
Brand — Primary reason for decline
1.Luna (moped) — Income-driven substitution as rising incomes enabled consumers to afford motorcycles
2.Dalda (vanaspati) — Regulatory-shelter collapse after 1991 liberalisation
3.BPL and Videocon — Technological disruption by global electronics manufacturers
How many of the above pairs are correctly matched?
Which of the following best describes the economic rationale for a large conglomerate acquiring a dormant but historically recognised brand rather than launching an entirely new brand in the same product category?
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