Company Outsider Why Tatas seeking ministerial mediation strikes at capitalism

The parallel images point to a troubling global trend: the boundary between government and private enterprise is thinning.

At its simplest level, the government’s core responsibility in capitalism is to establish and enforce the rule of law, safeguard property rights, and maintain a stable environment where markets can function even as private enterprise, operating within that structure, focuses on investment, innovation, and production. The two events, mentioned above, illustrate how far that principle has been eroded.

The US government now holds a major stake in chipmaker Intel, once the byword for private enterprise. Meanwhile, Britain is offering a £1.5 billion loan guarantee to JLR after the company failed to insure itself against a cyberattack. In India, too, the numbers tell the story starkly. The government has become the primary engine of capital expenditure even as private sector capex has been declining. Effectively, the Indian government now drives infrastructure buildout, with private capital largely in the slipstream. That’s not all. It is also increasingly playing white knight to struggling corporations, bailing out debt-laden Vodafone Idea by converting spectrum dues into equity. And now, the government is positioned as mediator in the Tata group's internal succession dispute, a role traditionally reserved for boards, shareholders, and regulators.

This pattern represents what a 2024 paper by law firm White & Case calls "growing government influence" shaping global business through "an ever-greater degree" of intervention. But if governments are going to stoke the economy, incentivize consumption, bail out failing companies and play peacemaker for warring corporate factions, what exactly are corporate leaders being paid for? Even worse, as firms come to expect state intervention, the competitive incentives to restructure or exit, which are the very essence of capitalism, inevitably dull.

Managed capitalism risks politicizing independent boardroom decisions and shifting accountability from markets to ministries. India has travelled this road before. Pre-liberalization, the government dictated who could make what, when, and to what degree. Airlines, banks, and insurance companies were nationalized because private business supposedly couldn't be trusted with such critical industries. The licence-permit raj strangled growth until reforms in the 1990s freed private enterprise.

Today's interventions differ in justification but not in effect. Take the government's role in the Tata dispute. India now has robust regulatory infrastructure that didn't exist in the license raj era. The Securities and Exchange Board of India (Sebi), established as an autonomous regulator in 1992, oversees Tata Sons' role as holding company for the group's 30-odd listed companies. Tata Trusts (especially those registered in Maharashtra) fall under the Maharashtra Public Trusts Act and are subject to oversight by the Charity Commissioner of Maharashtra. These specialized regulators exist precisely to handle such issues without political interference.

To be sure, government intervention has its place and time. During the 2008 financial crisis, the US government was forced to play a major role in order to prevent systemic collapse. In India, the Satyam scandal warranted special government attention. But these were cases where company failures threatened broader markets or the economy. There is nothing to show that Tata's internal disputes threaten its listed companies' stability or pose systemic risk.

The rise of the government's role in business across the world coincides with a corresponding fall in people’s faith in capitalism. A September 2025 Gallup poll found US favorability toward capitalism has fallen to 54%, the lowest in 15 years of tracking. Simultaneously, public perception of big business has deteriorated significantly. This gives governments an excuse to intervene in corporate affairs, creating a self-fulfilling prophecy wherein more intervention breeds less confidence in markets, which justifies further intervention.

From ministerial mediation in corporate disputes to the licence-permit raj is a slippery slope. India spent decades escaping that system's grip. Business leaders who now court government favour may win short-term advantages, but they risk resurrecting the very controls that once strangled Indian enterprise. The separation of government from private business isn't just an ideological preference but the foundation of India’s progress. Once that boundary dissolves, rebuilding it proves far harder than maintaining it ever was.