Explained: Inside Tata Trusts’ Deepening Divide and What It Means for the Stability of the Tata Group

With a market capitalisation exceeding $300 billion across 26 listed entities, the Tata Group is one of India’s most systemically important business conglomerate.

Tata Trusts, which collectively own about 66 percent of Tata Sons – the holding company of the Tata Group--- are witnessing widening divisions among trustees. What began as procedural questions has evolved into a broader disagreement over how India’s most powerful charitable institution exercises oversight and takes key decisions that shape the future of the $300-billion Tata Group. The dispute between the two sections of trustees essentially boil down to how Tata Trusts should exercise its superintendence over Tata Sons.  There is also the separate, though related issue, as to whether Tata Sons should list. Although not listed on the agenda, some of these issues are likely to come up for discussion during the Tata Trusts board meeting on Friday.

Moneycontrol breaks down what is driving the tensions, why they matter, and how they could influence the next phase of Tata Group governance.

The trigger: disagreement over decision-making and oversight

At the heart of the current turbulence within the Tata Trusts is a widening disagreement over how key decisions are taken and communicated between the Trusts and Tata Sons. Trustees are divided on whether the existing governance framework provides adequate consultation, transparency, and collective oversight — particularly on matters involving large capital deployment or board-level appointments.

The issue came to a head recently over the approval process for a ₹1,000-crore capital infusion into Tata International Ltd (TIL), the group’s trading and distribution arm chaired by Noel Tata. Some trustees reportedly objected to the way the proposal was handled, claiming it was taken up without adequate circulation of supporting documents or detailed financial reasoning.

Minutes of the Tata Sons board meeting held on August 8, reviewed by Moneycontrol, show that Tata Sons chairman N. Chandrasekaran supported the proposal but noted that total requirements could eventually rise to about ₹3,000 crore.

Within the Trusts, however, the episode reignited a longstanding debate: whether major decisions that influence the group’s capital allocation and exposure should be routed through a more structured consultation process between Tata Sons and the Trusts.

People familiar with the deliberations say the disagreement reflects contrasting views on how much operational independence Tata Sons should retain and how actively the Trusts should exercise their supervisory role. Some trustees argue the Trusts’ mandate is broad oversight, not management decisions; others believe that as the majority shareholder, the Trusts must ensure tighter oversight to maintain accountability.

Leadership friction and boardroom fault lines

The growing unease has also exposed differences in leadership style. During Ratan Tata’s long tenure as chairman, decision-making was marked by cohesion and deference to his authority.

Key agenda items for Tata Sons board meetings would be discussed between Tata Sons Chairman N Chandrasekaran and Ratan Tata,  according to people familiar with the matter. Subsequently Mr Tata would convey his instructions to the nominees of Tata Trusts on the Tata sons.

Noel Tata, who took over on October 11, 2024,  has yet to build the same level of alignment.

Dissenting trustees view Noel Tata’s leadership as overly centralised, arguing that key decisions are being discussed in smaller informal circles rather than through collective deliberation.

In August this year the trustees unanimously voted for a fresh five-year term for Chandrasekaran, currently chairman and managing director,  once his current term ends in early 2017.  This would ensure that Chandrasekaran remains at the helm of Tata Sons Chairman and MD till early 2032 providing stability and continuity to Tata Sons.

According to people familiar with the matter in one such instance Noel Tata had informally floated the idea of elevating Tata Steel managing director T.V. Narendran as deputy chairman of Tata Sons. The discussions around Narendran’s appointment were first reported by Mint on October 10. There have also been informal discussion on separating the positions of Chairman and Managing Directors of Tata Sons and creating new positions such as a deputy managing director, according to the people cited.

Emails sent to SP group, Tata Sons, Tata Trusts remained unanswered until press time. As these matters pertain to Tata Trusts and Tata Sons, we in Tata Steel have no comments to make on these queries, a Tata Steel spokesperson said.

These suggestions, which have not yet been formally placed before the Trusts, have reportedly met with resistance from several trustees who questioned both their timing and optics. Some have argued that such proposals should emerge through formal consensus and institutional process rather than individual initiative, especially given the sensitivities surrounding governance reforms and succession within the Tata ecosystem.

The broader concern, insiders say, is not just about specific appointments but about the precedent such moves could set for how the Trusts assert influence over Tata Sons’ leadership and the delicate balance between familial legacy and professional management that has long defined the group.

In another instance of friction, four trustees opposed the reappointment of Vijay Singh, a former bureaucrat and longtime nominee director on Tata Sons board at a meeting of the Trustees on September 11. Singh resigned soon after the vote of no confidence.

The differences have also extended to the nomination of the next director from the Trusts to Tata Sons. Some trustees have proposed long time Ratan Tata confidant Mehli Mistry’s name, but Noel Tata is understood to have opposed the move. The growing mistrust, observers say, threatens to impede decision-making even on core philanthropic matters — the very purpose of the Trusts.

There have also been media reports on the possible appointment of Uday Kotak, prominent lawyer Behram Vakil and Narendran on the board of Tata Sons. As per the sources cited these possible appointments have not been discussed by the Trustees. As per law, the nomination committee of the Tata Sons board has to first recommend names of possible directors.

The listing dilemma and regulatory scrutiny

The question of a possible listing of Tata Sons remains one of the most complex challenges before the Trusts. Under the RBI’s scale-based framework for large non-banking financial companies (NBFCs), Tata Sons — classified as an upper-layer NBFC — was required to list by September 30, 2025.

Although Tata Sons has repaid all its public debt, meeting one of the conditions for possible exemption, the RBI has yet to issue a formal waiver or clarify its stance. Legal experts say that without an explicit exemption, Tata Sons technically remains non-compliant with the directive.

Sources told Moneycontrol that discussions between Tata Sons and the RBI are continuing and that the regulator may issue further directions in the near future. Tata Sons has also applied to surrender its NBFC license  and the RBI’s decision on that application is awaited.

At the centre of the listing debate are travails of the Shapoorji Pallonji (SP) Group, which owns 18.37 percent of Tata Sons . The SP Group has  long sought to monetize its stake amid growing financial stress.

While the trustees are united in opposing the listing, they are yet to reach a consensus how to facilitate an exit, given the far-reaching financial consequences it will have on Tata group . At the same time, given that billions of dollars of foreign borrowing are tied to the SP Group’s pledged stake, any delay or impasse could have ripple effects on investor sentiment and India’s broader financial system. Sources close to SP group say not allowing an exit would amount to minority shareholder oppression.

Government’s role and what lies ahead

The government is understood to be monitoring developments within the Trusts closely. Noel Tata recently met Union Home Minister Amit Shah and briefed him on his perspective on the ongoing differences. While the details of the meeting were not immediately available , officials are said to be concerned about maintaining stability within a group that plays a vital role in sectors such as defence manufacturing, aviation, and semiconductors.

According to some people aware of ongoing consultations, the government also favours a structured resolution to the SP Group’s exit — possibly through a phased or negotiated process — to prevent disruption to global investors and lenders exposed to the group’s borrowings. A disorderly outcome, officials believe, could affect investor confidence and India’s financial credibility.

With a market capitalisation exceeding $300 billion across 26 listed entities, the Tata Group is one of India’s most systemically important business conglomerate. The cohesion of Tata Trusts has traditionally served as its stabilising force. The current divisions — over governance, oversight, and regulatory compliance — mark one of the most sensitive moments in its recent history.