Signs of a deep division within Tata Sons risk diminishing public trust in the venerable Tata Group. A set of Tata Trusts is the majority shareholder of Tata Sons.
This holding company’s income is chiefly the dividends it receives from profitable operating companies within the group and its financial wealth is built on the stock market value of their shares.
Over 65% of Tata Sons’ profits then go through those Trusts to philanthropy. This is the simplistic explanation often given for why people trust Tata companies more than others.
However, public trust in ‘the Tatas’ has deeper roots. In large part, it arises from the respect that Tata companies give their workers and the care they take of the communities and environment around their factories.
Disputes within the extended Tata family over control of Tata Sons have caused its present governance problems.
J.R.D. Tata, who was chairman of Tata Trusts and Tata Sons for over half a century, was not a direct descendant of Jamsetji Tata, the group’s founder. He was the son of the founder’s cousin. Naval Tata, the father of Ratan Tata, who took over as chairman from J.R.D. Tata, was the adopted son of Lady Ratan Tata, the wife of Ratan Tata, Jamsetji Tata’s younger son. Cyrus Mistry, who was chairman of Tata Sons briefly after Ratan Tata, was the son of Pallonji Mistry, whose family owns 18% of Tata Sons’ shares.
Ratan Tata retained his position as chairman of the Trusts during Mistry’s tenure, and replaced him with N. Chandrasekaran, the current chairman of Tata Sons. In 2024, Noel Tata succeeded Ratan as chairman of the Trusts. He is Naval Tata’s son and Ratan’s half-brother, and is married to Cyrus’s sister.
Now a dispute appears to have arisen over an extension for Chandrasekaran as chairman of Tata Sons. Noel Tata and the Trusts are reportedly concerned that not enough is being done to turn around the performance of some loss-making companies in which Tata Sons is heavily invested (principally Air India and Tata Digital), while the Trusts need resources for their philanthropic work.
Internal power dynamics within the Trusts and Tata Sons are becoming a distraction from the genesis of the Tata brand. Its appeal can be traced to a fine balance that Tata companies—which are managed by independent boards accountable to their shareholders—have traditionally maintained between the financial demands of investors and the businesses’ wider social responsibilities.
At first, J.R.D. Tata was able to impose Tata’s social values on Tata firms because they had management contracts with Tata Industries, a 100% subsidiary of Tata Sons. This gave Tata Industries the right to appoint their CEOs and, through them, require that Tata values are applied in all their functions: integrity in financial transactions; respect for their workers’ dignity; and care of society’s needs.
In 1969, the Monopolies and Restrictive Trade Practices Act broke up Indian conglomerates. It banned the managing agency system that enabled promoters to control companies even if they were minority shareholders. However, J.R.D. Tata was able to keep Tata companies aligned with group values by virtue of the respect he had among CEOs and board members.
In 1991, when Ratan Tata took over leadership of the group, strong winds of change were blowing across India. The economy was opened to foreign capital. Ratan led the group to seize new opportunities. Tata firms began to raise capital abroad, get listed on foreign stock markets, acquire foreign technology and employ foreign CEOs. The group even acquired some British companies; at one point, it had larger revenues outside India than within.
Wall Street’s ideas of corporate governance began to change the values of Tata companies; they began to measure their performance by stock market valuations.
Today’s squabble over Tata Sons conceals a deep conflict of values. If Tata Sons goes public by raising financial resources through the stock market (while providing a favourable exit path to the Mistry family), as some trustees and board members want, stock-market values would begin to govern Tata Sons. This will diminish the ability of trustees to require group companies to practise Tata values.
The world in 2026 is not the world of 1991.There was a rising tide of globalization back then, as borders softened for the flow of trade, finance and workers. Covid and the subsequent Trump shock have revealed the fragility of that model of economic progress based on global supply chains.
Today, all countries—India most of all—must become self-reliant. We have millions of employment-seeking people. They are trainable, need to earn and can be our production army. Indeed, they constitute ‘appreciating assets.’ When their wages rise, along with improvements in their health, education and social security, they will form an enormous consumer market. This is what we need for India to become the engine of its own growth.
J.R.D. Tata used to say that whenever he had to take a tough decision, he would ask himself two questions. “What will be good for India?” and “what will be good for Tatas?” He would always choose the former, he said, because it always proved good for the Tatas.
India needs more leaders like J.R.D. Tata. We need business leaders who consider the needs of their country and employees alongside—or even before—the needs of investors in their stocks. And who will, in a crunch, accord the former precedence.
The author is the author of ‘Reimagining India’s Economy: The Road to a More Equitable Society’