An objective account of the Tata group’s evolution and its policies
The name Tata is associated with best practices, which includes being ethical and caring. When we talk of professionalism and governance, this name would come to our lips immediately. A book on this group by Mircea Raianu takes one through a historical journey starting from the British days to contemporary times. The 291 pages include references of around 80 pages which indicates the quantum of research that has gone into this rather remarkable book. More importantly, access to the Tata archives was made available to the author, guaranteeing an authoritative volume.
Interestingly, this is not a sponsored book by the company, which often happens when we have corporates get celebrity writers who could be journalists to write on them where it is more eulogy than critique. Here it looks like an independent view given by a historian and the tone is set by quotations that give different views about the group. There is one by TR Doongaji where he talks about how all of us can savour the Tata group in various ways in our daily life, starting from morning tea to dinner at one of their hotels. While this sounds good, the interpretation can be that the group is meant for the elites, as all of us cannot walk into the Taj. There is a quotation of Arundhati Roy, which, as can be expected, smirks of sarcasm when she says we are slaves to the corporate group as we eat even their salt!
The Tatas started off during the British days and have built an empire across various industries and services. It all started with textiles and opium trading which has evolved over the decades to be a salt-to-software conglomerate. Working with different governments is always a challenge in India as normally politicians expect kickbacks. Interestingly, the Tatas had differentiated between economic and political swadeshi even during the British times to navigate their interests. The difference between how the Tatas have managed and the others is that they have kept political parties in humour without any so-called manipulation. Therefore, while there is evidence to show that Tatas supported Mrs Gandhi during emergency, it was more for business interests. They even managed to ensure that there was no nationalisation of Tata Steel, which was actively on the cards at one point of time. Dealing with politicians in an equitable manner has been the motto for this group, Union minister Piyush Goyal’s recent outburst against the group being an exception.
While we all know of how Jamshedpur developed due to the involvement of the Tatas, the author also takes us through some of the controversies. While there is one story that says that one can drink water anywhere in the township, there is another which reveals how only the more privileged have benefited as slum areas have been ignored. There is a section on paternalism in the group, which actually reveals that it is not overly humane as it has been responsible for downsizing labour force across all streams and relying more on casual labour. From 1991 onward, which was the time India went in for liberalisation, the Tatas, too, turned around and stopped most of the benefits for staff, including welfare spending or jobs for family members. Clearly free markets cannot support such freebies.
Interestingly the author points out that when the Tatas acquired Corus in England, it was believed the group never downsizes and labour is safe. There was a buy-in for sure, but as the losses mounted, the stance changed. This was also a part of the tussle between Ratan Tata and Cyrus Mistry, where it was felt that the group cannot use domestic resources to sustain inefficient labour force overseas. The platform of nation-building that was associated with the group was used to attack this deal. The author takes us through the rather ugly episode of the open dispute between these two scions without really taking sides.
At the same time, the contribution of the Tatas to society is quite overwhelming and institutions like TIFR (research), TISS (social sciences and social work), TMH (cancer care) are some well-known ventures that have made a difference. It started with the Tatas being involved with the Indian Institute of Science.
The Tata model from the point of view of pure capitalism is a powerful story. Building such an empire is never easy in India. Even while the group lost out to the Birlas in setting up ventures abroad during the Sixties and Seventies, their long-term collaboration with foreign capital was leveraged in the IT space, with TCS now being a leader. From using experiences of links with the outside world in the pre-independence days to the control of natural resources, the Tatas have carved a niche in the corporate world.
So how could one summarise their ideas? Trusteeship, democratic socialism and free markets liberalisation were some of the driving forces that blended into the changing times of the market. The group has moved from nationalism and a development state to globalisation, harnessing all the strengths along the way to create this strong superstructure that spans various sectors ranging from food and steel to financial services. A true supermarket, which also never forgets philanthropy and will be remembered for all the institutions in research that have been set up along the way.
Madan Sabnavis is chief economist, CARE Ratings
Tata: The Global Corporation That Built Indian Capitalism
Harvard University Press
Pp 291, Rs 699