Research in the context of business history has seldom analysed how institutional environments from the pre-liberalisation era affect innovation investments made by Indian firms in the post-liberalisation institutional context. To address this gap, this study examines how imprints inscribed by the protected environment in the pre-liberalisation period constrain decision-makers’ mental models and inhibit the formation of innovation routines impeding innovation investments in the post-liberalisation era. Using the context of India’s regulatory punctuation, we test and find support for our assertion using two input-based measures of innovation investments and validate our results by performing a battery of robustness checks. Our findings demonstrate that historical institutional environments play a salient role in determining the extent of innovation investments committed by Indian firms and contribute to research at the intersection of business history and organisation studies.