The encyclopedia · Strategy & Leadership · Strategic decision · 1991–2016
HMT made every watch in India — then lost ₹242 crore on ₹11 crore of revenue
India's state-owned watchmaker dominated for 30 years. After liberalization, it posted a ₹242 crore loss on ₹11 crore revenue while Titan earned ₹1,675 crore.
HMT Limited · Titan Company · 2016-09
What happened
HMT — Hindustan Machine Tools — was a government-owned manufacturer that began making watches in Bangalore in 1961, in collaboration with Japan's Citizen Watch. Prime Minister Nehru unveiled the first Indian-made wristwatches. For three decades, HMT was India's watchmaker: the Janata, the Pilot, and the Rajat were on every wrist in the country.
After India's economic liberalization in 1991, the market opened. Titan (backed by the Tata Group) launched in 1984 with modern designs, quartz movements, and aggressive retail. Foreign brands followed. HMT, still a government enterprise with bureaucratic decision-making, could not adapt. Its designs were dated, its distribution was government depots, and its quality control lagged.
By 2012–13, HMT's watch business reported a loss of ₹242 crore on revenue of just ₹11 crore. In the same year, Titan's watch division earned ₹1,675 crore. In September 2016, the government shut down HMT Watches Limited entirely. A brand that had dressed a nation's wrists for fifty years was liquidated by administrative order.
Why it happened
- Government ownership meant slow decision-making, no accountability for losses, and no incentive to innovate — HMT could not fire, reprice, or redesign at market speed.
- The 1991 liberalization exposed a protected monopoly to competition overnight; thirty years of captive demand had built no competitive capability.
- Titan invested in design, retail, and quartz technology while HMT waited for government approvals — the gap widened every year.
- The ₹242 crore loss on ₹11 crore revenue is a 22x ratio: the cost structure was built for a market that no longer existed.
The lesson
A protected monopoly builds costs for a world without competition. When the market opens, it loses all at once — every process was designed for the absence of choice.
Aftermath
HMT's machine tool divisions continue to operate, serving industrial and defence sectors. The watch brand is gone. Titan is now India's dominant watch company with over ₹1,675 crore in annual watch revenue. The HMT case is taught in Indian business schools as the definitive example of liberalization's creative destruction.
Sources
- HMT Limited — Wikipedia (founded 1953; watches from 1961 with Citizen; largest Indian watch supplier 1970s–80s; 2012–13 loss ₹242cr on ₹11cr revenue; Titan ₹1,675cr same year; HMT Watches closed September 2016)
- HMT Watches closure — Press Information Bureau, Government of India (2016)
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