OPINION | Tata at a Turning Point: Governance, legacy, and the burden of greatness

tata-group

In the House of high corporate governance, even the faintest whisper of discontent echoes with amplification. When those whispers turn into camps, and ministerial interventions, one begins to wonder whether the foundations of discretion and discipline that long defined that house are being tested in unfamiliar ways.

Resilient corporate governance draws its strength not from the absence of disagreement, but from the courage to engage with it. Boards earn their legitimacy when independent directors can question, differ, and deliberate without fear of unsettling harmony. Earlier chairpersons like J.R.D. Tata or Ratan Tata relied on personal charisma, moral gravitas, and persuasive reasoning to forge consensus where structures alone might have faltered. Yet such alchemy of personality and presence is not a replicable trait, nor can it be the enduring substitute for systems meant to outlast individuals.

The current turbulence in the Tata Group, however, reveals a discomfort with dissent — an insistence that decisions must flow only through consensus, even when that consensus may silence necessary scrutiny. At issue are reappointments, board representation, and the boundaries of authority.

Current discord carries echos of an earlier rupture, when the unceremonious ouster of then-chairman Cyrus Mistry fractured the group’s carefully maintained composure. For a house long regarded as the epitome of restraint and grace — even in moments of parting with its most junior associates, let alone how poorly a chairman’s exit was handled — the recurrence of such is unsettling. It suggests that the challenge before the Tatas may not be governance in form, but governance in spirit — the ability to preserve civility without stifling candour.

For over a century, the Tatas have embodied a unique moral up-righteousness of Indian capitalism — a belief that commerce can coexist with conscience. The idea of philanthro-capitalism has always carried a quiet moral tension. The Tata Trusts, as controlling shareholders of Tata Sons, represent perhaps the most distinctive expression of that duality — where altruistic purpose and economic power reside within the same structure.

Media reports suggest that some of trustees of Tata Trusts are now said to be reconsidering the July 2025 resolution that had affirmed Tata Sons’ preference to remain unlisted. Such a reassessment, if it gathers consensus, could mark a significant shift in the group’s long-held stance on remaining private.

It would also clear one of the principal obstacles to the eventual listing of Tata Sons — a step that aligns with regulations framed nearly three years ago, when the Reserve Bank of India classified the company as an upper-layer non-banking financial entity. In substance and in symbolism, this would signal not just compliance with that regulatory mandate, but a willingness to reconcile legacy with the demands of a more transparent market era.

If regulatory dispensation were extended in this instance, such an accommodation would not merely dilute the Reserve Bank’s framework, but also erode the principle that governance standards apply uniformly, regardless of legacy or lineage. The Tatas now risk appearing on their reliance on its polity and policy goodwill, rather than regulatory preparedness.

Parallel to this rift runs the renewed demand by the Shapoorji Pallonji Group — the second-largest shareholder in Tata Sons — for a public listing of the holding company. The SP Group has framed its appeal by invoking the vision of Jamsetji Tata, and it seeks moral legitimacy for a structural change that would subject Tata Sons to the same disclosure norms as listed entities. Whether that argument is strategic for SP group’s solvency-improvement or principled about the Tata group’s ethos, the debate now touches the very heart of how one of India’s most trusted institutions defines responsibility.

While the Tatas may have legally prevailed in their earlier battles with a younger chairperson who sought to modernise the group’s direction, probably even at the cost of disrupting the old-ways, there may yet be lessons in what he was attempting to build. One hopes that the old animosities between the Tata and SP groups have been put to rest, for their public rancour — including the regrettable absence at Cyrus Mistry’s funeral — sat uneasily with the grace the group has long personified.

For Tata Sons, listing remains a deeply complex proposition — one shaped as much by structure as by circumstance. Its governance rests on the overlap between charity and commerce: Trusts exist for philanthropic purpose, yet they wield decisive control over some of India’s most valuable enterprises. The long-standing tension with the SP Group may well be one of the unspoken reasons for the group’s resistance to listing.

A public float could alter the equilibrium of control and scrutiny, inviting new dynamics at a moment when internal cohesion already stands stressed. There may also be genuine apprehension that listing could expose the holding company to unsolicited advances or creeping control, now that acquisition financing is permitted for Indian promoters by banks.

Yet the structural hardness of the current arrangement demands resolution. If the SP Group seeks a financial exit, who provides that liquidity, and under what terms? Selling such a stake to new shareholders would reshape the very architecture of ownership — a multi-billion-dollar question with implications far beyond valuation. In that tension between moral custodianship and market reality lies the next true test of Tata Sons’ governance design.

This unease is compounded by other strains. Several Tata companies, though valuable, have displayed uneven growth and some have lacklustre existence. The recent cyber-attack on Jaguar Land Rover — and the unacceptable logic that its cyber insurance had not been renewed in time — reflected lapses in preparedness unbecoming of an enterprise of such global stature. Investors are entitled to ask: when reputationally and financially grave events occur and no corrective measures are visible, what message does that send about internal standards?

In an age when even unlisted startups with modest capital and limited public exposure find their decisions dissected by shareholders and the media, institutions of the Tata Group’s magnitude cannot reasonably expect discretion. The greater the legacy, the sharper the lens of accountability — a reflection of the higher standard that its own history has set.

Tata’s stature in public life was built on conduct — on a rectitude that reassured markets even when the State faltered. The current unrest does not erase that inheritance, but it reminds us that even the most venerated names are not immune to entropy. The old faith that “the Tatas will do the right thing” must now manifest.

Every institution that outlives its stalwarts eventually reaches a moment when its legacy becomes both shield and burden. The Tata Group may now be at such a turning point.

As the Tatas navigate this, the answers they seek will not come from the State, the regulator, or the markets. They lie in remembering why this institution commanded faith long before corporate governance became a fashionable phrase.

(Srinath Sridharan is Author, Policy Researcher & Corporate Advisor, Twitter: @ssmumbai.)

Views are personal, and do not represent the stand of this publication.