This chapter presents a critical overview of the Indian context regarding one of the most crucial human resource (HR) systems in organizations, namely, the performance management system (PMS). It outlines the history of the development and acceptance of performance appraisal (PA) management systems in India. The competition presented by the multinational corporations has forced Indian organizations to re-visit their systems, with a view to staying competitive and competing at the global stage. A large variety of both forms and designs of Performance management systems (PMS) are in use in Indian organizations. With the growth of the Indian economy, more and more Indian organizations are emphasizing development of effective PMSs. In the late 1970s and early 1980s, most Indian organizations were using PAs to regulate employee behavior and help develop employee capabilities. Many HR professionals admit a new-found respect for PMSs in India, viewing them as a tool for transforming the organization through promoting high performance.