The 60th anniversary of India’s independence seems an opportune time to take stock of the nature and extent of the Tata group’s participation in the country’s economic and industrial growth. How has this participatory business panned out, what are its highlights and its downside, and where to from here?
In this interview with Christabelle Noronha, Tata Sons' Chairman Ratan Tata shares his thoughts on India and its economy, the challenges of the present and the promises of the future.
How, in your opinion, has the Tata group participated in the evolution of the Indian economy and industry in the post-independence era? What has been the predominant feature of this participation?
I think the Tata group’s greatest contribution to the growth of the Indian economy and Indian industry probably happened in the pre-independence era. The group’s investments in industries such as steel, textiles, power and hotels were certainly driven by an entrepreneurial spirit, but they were driven even more, I think, by a desire to make India self-sufficient and independent of its colonial masters then. Jamsetji Tata was gripped by the idea of making India self-reliant. The businesses he seeded and those that came to be after his passing — airlines, chemicals, etc — were, in a way, the foundation industries of the Indian economy. Little was attempted in what could be termed a purely consumer area, the only early foray there being Tata Oil Mills.
The group’s contributions were not confined to entrepreneurship; Jamsetji was the moving force behind the setting up of the Indian Institute of Science and, after independence, there came the Tata Institute of Fundamental Research and the Tata Institute of Social Sciences. There was no ulterior motive in establishing these institutions; the objective was to help further the skills and capabilities of India and Indians. We have never allowed our companies or the individuals in them, to become dealers or commission agents or profiteers.
Before independence, the Tatas had a big role to play in laying the ground for an industrialised India. That changed, to a certain extent, after freedom arrived and the country started pursuing the Soviet model of development, with the emphasis on the public sector. That’s when many private enterprises, the Tata group among them, became targets for nationalisation. We went through a phase when we became an endangered species. For a long period of time we stood still — because we were not allowed to expand, we were not allowed to enter any new businesses. That’s why the Tatas, bar a few exceptions, did not really grow between the 1950s and the 1970s.
Did the Tatas lose focus during this period?
I don’t think so. I recall an incident from when I was a young man. There was a visionary scheme of extracting minerals from seawater that Darbari Seth [the late chairman of Tata Chemicals] had conceived. We were never given permission to get going on that project. There were other such ideas as well. What did happen, though, was that towards the end of the 1970s some leaders in the group began to lose hope that things would change.
In many ways, big business that powers the rise to prominence of nations. How has India benefited, economically and otherwise, from having the Tata group at the vanguard of the growth story that we are witnessing?
As I said earlier, we did not invest in the trading of basic materials; we did not exploit the land in terms of moving resources out. When we did, we added value to it and produced an end product. I think our contribution to the nation was in building a foundation for basic industry, creating a foundation for technology, and setting some benchmarks in corporate governance and ethical business conduct.
We imposed on ourselves the creed of giving a fair deal to our customers and to all our other stakeholders. We were, in a manner of speaking, the fabric of India’s future industrialisation. I know that sounds a bit pompous, but what I’m saying is that we really did pave the way for India’s development in the public as well as private spheres. A couple of other points: we never preyed on other companies and we never throttled competition. Never has a Tata company gone to the government to lobby against its competitors, overtly or covertly.
How is the Tata brand perceived in the global marketplace? Is enough being done to promote it?
We are probably not doing enough to build the Tata brand globally, but we are one of the most recognisable corporate names coming out of India. Apart from size, market capitalisation and the rest, we are seen as a poster boy for ethical business, trustworthy and fair. That’s a model western companies feel comfortable with. We are also seen as a caring employer who understands its corporate and social responsibility, not just in the context of its own people but also the communities around our facilities and businesses.
Some foreign investors accuse us of being unfair to shareholders by using our resources for community development. Yes, this is money that could have made for dividend payouts, but it also is money that’s uplifting and improving the quality of life of people in the rural areas where we operate and work. We owe them that. By providing support in areas such as health and education, livelihoods and the environment, we are trying to — as much as we can — take the wellbeing that exists within our own plants and facilities to the world immediately outside them.
How does this help the Tata group?
I think it helps differentiate us. It gives the community a sense of belonging and sharing in our growth rather than developing a distaste for us. That’s one big reason we’ve never had problems with the communities around our plants in all the time we’ve been there.
As chairman of the investment commission and a member of the prime minister’s council, what do you think Indian companies should do to strengthen the imprint of brand India globally?
I think the first and foremost concern about promoting the India brand in the global marketplace is that the claims made on its behalf should not be skin-deep. Our goal should be to ensure that these claims go down to the root. We aren’t seeing much of that as yet. When we promote India in its 60th year as a free nation and advertise all the great things we’ve done, we should be talking the truth and not mint-flavouring what we say.
In the polarised times we live in, there are those who see the economic model that India is now following as fundamentally flawed. How can business groups such as the Tatas help change perceptions on this front?
There’s a view that the model is unsustainable, but I don’t think it would be fair to say there’s a general view that it’s flawed. People did say that sometime ago, when the licence raj was in force, when we had a high tax regime, when the benefits of growth did not seem to go to the people. There was great disparity then between the rich and poor; whether that has increased I cannot tell, but I believe there is — when compared with 50 years back — a greater sense of participation among Indians in the growth and evolution of the country.
As the incidents in Singur have demonstrated, even a business group with the best of intentions can be caught up in situations beyond its control. How are companies to cope with such challenges in today’s India?
I think Singur has been an exceptionally unfortunate and unique situation. The problems there are mainly political — between two political parties — and we’ve been caught in the crossfire. The land acquisition was not our doing; the West Bengal government managed that. There was no problem when it was offered to us or when we accepted. Singur becoming an issue was an out-of-the-blue happening.
The solution lies in sitting down with the state government and talking about compensation, retraining, reemployment and the rest, with Tata Motors being made a party to this activity. Instead, what we have is a chorus of negatives, loose talk of returning the land, women and children blocking roads, and guns, bullets and firings.
There’s also the environment issue at the Dhamra port.
The Tatas appear to be one of the targets. I can keep talking about that, but it will not be worthwhile. Dhamra Port is an L&T project, but L&T is not being badgered; we are. I’ve often asked myself what would happen if we were not to invest anything in Dhamra Port, if we exited it totally and let L&T find another partner. I think we would still be attacked. They will keep harassing us — because we are visible and our pockets are deep.
What is the best way of addressing these challenges?
We don’t know. We have to sit and think about how we are going to deal with them. The problems aren’t going to be solved through monetary gratification from our side, so we have to determine what’s to be done.
Do you believe a case still exists for certain areas of Indian business and industry to be closed to foreign enterprises? Do entities such as the Tata group have the capacity and capability to fill the void left by the exclusion of foreign institutions?
I’ve never believed protectionism of that kind will lead us anywhere. I think you can have certain specific rules for engaging with India — for example, not allowing mineral resources to be taken out of the country — but there is not a shred of doubt in my mind that when you open an economy you should do it in totality. Foreign investment adds a sense of competition; we should see this as a wake-up call to modernise and upgrade. Companies that do not will undoubtedly die.
On a scale of one to ten, how would you rate the Tata group’s performance, purely from the business perspective, during the post-independence years, especially following liberalisation?
After independence, from the 1950s to the 1970s, our performance would probably rate less than five on a scale of ten, not so much because of our own doings but because of the constraints placed on us from outside and the enormity of the policy challenges we had to deal with. After liberalisation we have progressed from that less-than-five position to a score of seven or seven-and-a-half. We are not at eight or nine because we are just starting to see the fruits of our new enthusiasm, in our new initiatives and in our sense of entrepreneurship. I think we have shed our averseness for risk, and our views of small increases and timid growth for bolder and larger endeavours.
How does the Tata group of today compare with the Tata group of JRD Tata’s time? What’s common to the two and what makes them distinct entities?
The common features are, hopefully, the value systems and the ethical standards. What’s not is the idea of putting the team over the individual. Also, today we are much more adaptive to new technologies.
Many pundits put down the success the Tata group is enjoying to Ratan Tata. What’s your take on that? How do you think history will rate your contribution?
I do not know how history will judge me, but let me say that I’ve spent a lot of time and energy trying to transform the Tatas from a patriarchal concern to an institutional enterprise. It would, therefore, be a mark of failure on my part if it were perceived that Ratan Tata epitomises the group’s success. What I have done is establish growth mechanisms, play down individuals and play up the team that has made the companies what they are. I, for one, am not the kind who loves dwelling on the ‘I’. If history remembers me at all, I hope it will be for this transformation.