Ratan Tata, who died on Oct. 9 at the age of 86, held a unique place in India’s business pantheon. Part industrial titan, part venerated secular saint, his ability to combine global success with a reputation for ethical probity was seen to represent the best of the country’s business culture. Yet as India’s commercial scene grew ever more rapacious and its burgeoning band of billionaires ever wealthier, Tata often looked less like the leading representative of modern Indian capitalism and more like a singular exception to it. Teasing lessons from his career for India’s future is therefore complex. There are some, however, that the country would be wise to follow, especially as Indian Prime Minister Narendra Modi seeks to move forward with plans to build a successful middle-income economy over the coming decade.
Tata was picked to lead his family’s business empire back in 1991, the year of India’s own economic reopening after decades of socialist planning, taking over as chair of Tata Sons, the holding company that runs the sprawling Tata Group conglomerate. In his first decade at the helm, he won admirers for rationalizing a group that had grown unfocused during India’s socialist years, churning out steel, chemicals, cars, tea, and more. But it was his second decade that won his reputation, as he launched a bold global expansion, snapping up trophy assets such as steel company Corus in 2007 and Jaguar Land Rover one year later. Under his leadership, the Tata Group transformed from a staid, conservative Indian concern into a bold experiment in globalization, becoming an emblem of India’s own growing global ambitions in the process.
I met and talked with Tata on a number of occasions when working as a foreign correspondent in India in the aftermath of that expansion period. He was cerebral, soft-spoken, and, as his reputation suggested, unfailingly gentle and polite. In person, he presented an image quite distinct from the more buccaneering billionaire tycoons who had by then come to dominate Indian business.
All that said, even back then, Tata’s outstanding reputation sat somewhat at odds with his mixed business record. Corus was a costly failure that eventually had to be written off. The Tata Group remained unfocused, with dozens of mediocre companies offset by just a few star performers, most notably its technology arm, Tata Consultancy Services, a business with which Tata was not closely associated. Many of his own signature ventures were much less successful, most famously his attempt to build a cheap, small car fit for Indian budgets, the Tata Nano. In an interview in 2012, Tata told me that he was downcast that the project flopped. “I think there is no sense in saying that I’m satisfied. I’m very depressed,” he said.
Yet despite this, there are three lessons India might take from Tata’s career—the first being the ongoing need to improve the broken relationship between Indian business and the state.
In that same interview, Tata gently criticized India’s government, at the time a moribund, scandal-prone administration led by Prime Minister Manmohan Singh of the Indian National Congress. India’s bureaucrats, Tata hinted, did little to help industrial companies like his own; he had, in effect, been forced to look for growth internationally. “If we had the same kind of encouragement to industry,” he said, delivering the most gentle of critiques, “I think India could compete definitely with China.”
Tata’s press handlers went ballistic when the interview was published, fearful that even soft criticism of this kind would invite punitive punishment in response from the state. A better reaction from the government would have been to note that Tata’s drive for globalization was less an expression of India’s success than a reflection of its failures to improve the domestic business environment—a task that remains at best a work in progress today.
A second lesson is the importance of ruthlessness, not a trait typically associated with a business leader more often described for his kindliness.
In 2012, Tata picked business leader Cyrus Mistry to be his successor. The handover proved unsuccessful. Mistry struggled to turn around the group’s fortunes. In 2016, Tata orchestrated a boardroom putsch to sack him. A bitter court dispute followed, in which Mistry attacked Tata for perceived governance failures, tarnishing his reputation. But in retrospect, Tata’s cold-blooded decision proved wise for the company’s bottom line, installing a new chairman, Natarajan Chandrasekaran, who has since improved the group’s performance.
Tata’s third lesson is perhaps the most obvious, namely that India continues to face a difficult trade-off between ethical probity and business success. I recall one of Tata’s lieutenants in Bombay House, as the group’s corporate headquarters in Mumbai are known, bemoaning the complexities of running a business in India. Launching any deal or new venture came with thickets of temptations to cut corners, the lieutenant said, or demands for bribes or sweeteners. The opportunity cost of an ethical approach was huge.
The Tata Group’s record in this regard is not quite as spotless as its reputation suggests. Over the years, it, too, has been caught up in scandals here and there. But Tata himself mostly managed to lead a company that balanced strong growth with ethical behavior—even if it came at the cost of growing his business more slowly than pugnacious competitors such as Reliance Industries chair Mukesh Ambani and Adani Group founder Gautam Adani, now the country’s preeminent billionaires.
Striking this balance will be just as important in the coming decade as it was during the 2000s, the last period in which India’s economy attracted similar attention and investment. As Modi moves forward in his third term, India is again the world’s fastest-growing major economy. As China continues to slow and Western businesses decoupling from there seek new homes, investing in India will look ever more attractive. That, in turn, will bring all the temptations that come along with roaring growth and rapid inflows of global capital.
In the mid-2000s, India’s boom years spawned a corporate debt crisis that took years to work out and left a wake of ugly corruption and cronyism scandals. A new period of boom-and-bust remains a clear threat today and with it a possible unwelcome return to the crony capitalism of old.
Back in 2012, Tata told me that he wanted to be remembered for finding the right balance between business results and admirable values. “I would hope that people would say that I was able to lead the group with dignity and that I tried to do the right thing,” he said. In the end, he succeeded in that task. As India’s economy enters a new phase of rapid expansion, the country would do well to bear in mind once again the balance Tata sought to strike.