Divisions within Tata Trusts threaten the idea of Tata itself

In The History of the Decline and Fall of the Roman Empire, Edward Gibbon argues that great institutions rarely collapse in a single moment. Instead, they weaken through small, compounding failures—the corruption and king-making of Praetorian Guard, or to the steady erosion of civic virtue and public spirit among Roman citizens. That lens is useful in parsing the current strains within the Tata Group.

Some of the facts started out as merely procedural. Former trustee Mehli Mistry filed an affidavit before the Maharashtra Charity Commissioner challenging whether two of Tata Trusts’ own vice-chairmen, Venu Srinivasan and Vijay Singh, were even eligible to serve, given that the 1923 deed of the Bai Hirabai Jamsetji Tata Navsari Charitable Institution requires its trustees to be Zoroastrians resident in Mumbai. Srinivasan has since resigned, though Singh has been obdurate. Subsequent reports show that Srinivasan and Singh differ from the other board members on a more substantive issue—the listing of Tata Sons Pvt. Ltd.

That comes in the wake of another standoff. The decision to extend a third term to N. Chandrasekaran as chairman of Tata Sons was left unresolved in February, after Noel Tata, now heading the Trusts, called for stiffer accountability conditions.

Taken in isolation, these are not existential events; they merely indicate a realignment of personnel following a change of guard after Ratan Tata’s death in October 2024. But the timing matters. Governance tensions are surfacing just as several group businesses face strategic pressures.

According to some estimates, Air India could post losses of approximately ₹150 billion in the current financial year. Tata Steel Europe, still suffering from the hangover of the spectacular Corus acquisition of 2007, is loss-making while Jaguar Land Rover (JLR), another such acquisition gone wrong, is grappling with collapsed China sales and straining finances. Tata Neu, the super app meant to consolidate the group’s different business under one digital roof, has not found its feet yet. And underwriting it all is Tata Consultancy Services Ltd., which now faces a profound AI-driven restructuring of the IT services industry that threatens its very headcount model along with the dividend stream that has funded every Tata ambition for nearly two decades.

Business churn is built into the very nature of capitalism. Stuttering older companies and conglomerates must die if new ones have to emerge. But the Tata Group is not merely a very large Indian business conglomerate. It is one of the last significant examples anywhere in the world of the trust-owned, purpose-driven enterprise, insulated from activist shareholders and free to build across generations rather than quarters. There are only a handful of those left. In their own ways, these institutions have upheld Jamsetji Tata’s foundational premise that a business should stand for something larger than the enrichment of its owners. In a world where most companies are driven purely by profits, the Tata Group’s survival is vital.

The history of business dynasties that lost their way under similar structural stress is cautionary. In the US, the Pritzker family divided its business empire after internal disputes while Anheuser-Busch eventually sold to InBev after governance and succession issues reduced its strategic flexibility. In both cases, external pressures mattered, but internal disagreements shaped the outcome.

At Tata, while reports suggest a leadership joust, it is neither Noel Tata nor Chandrasekaran that are the problem. The very structure Jamsetji Tata put in place and his successors built on, generates an ambiguity about who is actually in charge. The trusts own the group but have no operational mandate. The family controls the trusts but has no formal corporate role. As long as that ambiguity is managed by consensus among people who trust each other, or an all-powerful leader like Ratan Tata, the model works well. When it is not, as the Cyrus Mistry episode demonstrated, it looks like a failure.

What the present moment requires is not more legal opinions about Zoroastrian eligibility, but carefully thought-through decisions about the future of Air India, Tata Steel Europe and about whether TCS is to remain a cash cow or become the group’s strategic spine in the age of AI.

Gibbon’s great insight was that institutions in decline are often too preoccupied with internal questions to recognise external change. The Tata Group could well emerge from this phase stronger and more defined, much as some historians argue Rome transformed rather than fell. The key is whether those within the institution can see the problem clearly and act on it in time.