Founded in 1411, Ahmedabad saw a variety of political dispensations up to the time of Indian independence-the Gujarat Sultanate, the Mughals, the Marathas and the British. Always a deeply mercantile city, Ahmedabad's business leaders, especially of the last two centuries, were closely involved with the city's administration. The city was unique among India's industrial cities in encouraging indigenous entrepreneurship. It had very few European firms. There was no formal management education in pre-independence India; businesses were either family-run, or run by managers trained abroad who were part of the managing agencies that had controlling stakes in the businesses.

In 1858, Ranchhodlal Chhotalal (1823-98) registered the city's first textile mill, heralding the dawn of modern industry in Ahmedabad. For over a century thereafter, Ahmedabad was known for its vibrant cotton textile industry.

A series of policy initiatives soon after Independence, beginning with the Industrial Administration Business and Management Committee of the Council for Technical Education (1948-50), led to the decision to set up a national institute of management education. The Ford Foundation's India Office supported the engagement of consultants from the United States of America to help in the planning.

Mumbai (Bombay) was the preferred location, but taking advantage of the slow response of the newly formed state of Maharashtra, Vikram Sarabhai lobbied strongly for Ahmedabad as the site of the proposed institute. Finally, not one but two institutes were set up in 1961, in Kolkata and Ahmedabad.