Why India’s trading communities face resentment

In August, protests in Telangana accusing Marwari traders of “taking over local markets” tapped into an old unease. India’s trading communities, the Marwaris, Gujaratis, Parsis and others, have long been symbols of enterprise and economic influence. But across regions, mercantile success has often been shadowed by suspicion and, at times, hostility.

In a 2023 research project I co-authored on ventures founded by members of trading castes, we observed that entrepreneurial success was often accompanied by suspicion and vilification – as if success itself invited suspicion. Although our study did not measure hostility directly, the broader literature we reviewed offered some clues about where this sentiment was coming from.

Trading communities often rely on dense internal networks for capital, apprenticeship, and market information, which outsiders may interpret as exclusionary. When such groups cluster in specific sectors and expand rapidly, local competitors can perceive this as disproportionate economic sway, fuelling narratives of encroachment or dominance.

Like in Telangana, similar incidents of resentment have surfaced in Karnataka and Odisha. For instance, in 2019 in Bengaluru, pro-Kannada groups publicly threatened the Marwari community over language and cultural issues, framing them as outsiders in the city’s landscape. These regions host trading groups such as the Shettys in Karnataka, Klings in Odisha and Komatis in Telangana.

Still, the Marwaris, originally from Rajasthan, have repeatedly borne the brunt of resentment. By contrast, in West Bengal, such flare-ups have been far less common since Marwaris have had a long and well-established presence there.

Resentment towards trading communities is rarely driven by economics alone. It emerges from a mix of caste identities, migration histories and tightly-knit business networks that can appear closed to outsiders. When these factors combine with limited social interaction, even routine commercial competition can harden into mistrust. Building broader networks of trust is essential to prevent stereotypes from hardening into hostility.

Trading history

Historically, trading communities, particularly the Marwaris, were central to India’s economic development. In the pre-Independence era, these communities were not only traders but also moneylenders and local bankers, directly fueling commerce. Their use of hundis, the precursors to bills of exchange, enabled the transfer of funds without physical cash. Their readiness to migrate, aided by the expansion of railways under the British, helped them build networks far beyond their native regions.

After Independence, these communities have continued to shape India’s business landscape. Major Indian conglomerates such as the Tata Group, the Aditya Birla Group, the Goenkas, Godrej Enterprises, the Mahindra Group and the Ambani and Adani Groups trace their origins to trading community backgrounds.

Studies suggest that trading community members account for nearly 45% of directors on listed company boards and were involved in half of all new ventures launched between 1991 and 2014, with Marwaris, bania and Jain communities from Gujarat, and Parsis playing an especially prominent role.

Caste, too, plays a part in how trading communities are seen, though its impact differs across regions. Many trading groups themselves are organised along caste lines, with tightly-knit internal networks that historically helped build trust, capital, and mobility in unfamiliar markets. But these same networks can also translate into concentrated economic power in particular sectors which local groups may interpret as caste-linked dominance.

In Telangana, for instance, local caste-based trader groups and Dalit organisations viewed migrant Marwaris as outsiders in an already competitive marketplace. In such situations, caste identity can amplify economic rivalry and heighten the sense of being socially separate, allowing grievances to surface more quickly.

This perception of distance is often reinforced by economic prominence. Local competitors may view the dominance of trading groups as suffocating, while their cultural insularity reinforces perceptions of separateness. Merchant communities often sustain insular social practices: shared meals, community-exclusive religious schools to supplement modern education with religious instruction, strict rules of marriage, and early immersion in family businesses. These traditions preserve culture and commercial acumen, as well as caste boundaries, but limit interaction outside the community.

Such insularity can deepen divides. Parallel schooling narrows social exposure, while early immersion in commerce discourages entry into broader professional networks. What ensures continuity within the community can, unintentionally, restrict bridges to the broader society. Sameness strengthens trust within groups, but it can also build walls. As management thinker Erin Meyer notes in the Harvard Business Review, when people don’t understand each other’s unspoken codes and habits, mistrust creeps in easily.

Building bridges

India’s own history shows that when groups do not interact regularly, whether across religions, caste or regions, small gaps in understanding can turn into deep divides. Political scientist Ashutosh Varshney observed this in his study of Indian cities: places with dense everyday economic and social interactions between communities tended to remain more stable. Varshney’s study dates back almost three decades and focused on Hindu-Muslim relations, but the underlying idea holds.

In many recent flashpoints, including Telangana, resentment has arisen not across religions but local caste groups and merchant communities. Here too, the absence of shared spaces, social overlap, and routine interaction can allow economic competition to turn into suspicion.

How, then, can resentment toward trading communities be addressed?

Reframing is one strategy, where what was once stigmatised became normalised. But reframing requires effort on both sides. A starting point is to ask whether the presence of trading communities is an asset.

For locals, caricatures of “profiteers” obscure the fact that trading groups anchor entire value chains sustained by non-trading participants. For merchants, the task is to engage more deliberately with the wider community through visible civic participation and greater openness in everyday social interactions, so that economic ties are accompanied by social ones.

West Bengal offers an instructive example. Stereotypes persist but the state has not witnessed the anti-Marwari agitations seen elsewhere. Kolkata’s Marwaris invested early in social capital, supporting the nationalist movement, advancing women’s education and funding hospitals, schools and charitable trusts. Philanthropy also secured legitimacy. The civic contributions of the Marwari traders earned recognition and embedded them in Bengal’s social fabric.

Trading communities are complex actors in India’s economic and social story. Recognising that complexity is the first step toward avoiding cycles of resentment.

Trading communities must proactively build bridges with the broader population where they are recent arrivals. Local societies, in turn, must resist easy scapegoating and value the contribution these groups make. Only by cultivating broader networks of trust can stereotypes be prevented from hardening into hostility.

Abu Rehan Abbasi is an assistant professor at IIM Kashipur. Views expressed are personal.