Tata — The Global Corporation that built Indian Capitalism — Mircea Raianu

Nearly a century ago, Bombay House, the iconic global headquarters of the Tata Group, a multinational corporation that produced everything from salt, textiles, forged steel, textiles, hydroelectric power, software and so much more. After their start in cotton and opium trades, the Tatas, Parsi family from Gujarat, India ascended to new heights in Indian economy during the most tough times of independence of the country in 1947. It faced tough challenges from restive workers fighting for their rights and political leaders who sought to curb its power.

This family run business that was born during the British Empire went on to capture the world’s attention. The growth of Tata was a complex process though, shaped by world historical forces — eclipse of imperial free trade, the intertwined rise of nationalism, the return of globalization and market liberalization. Today, Tata stands tall and leads the world’s major economies, selling plethora of products while at the same time operating philanthropic institutions that invest heavily in medicine and engineering.

The author has deep dived into the archives of this company and elucidates how a titan of industry was created and what lessons its story may hold for the future of global capitalism. I personally consider the Tata group as one big behemoth like Koch Industries in the US, who manufacturers tons of items and have established their widespread roots all over.

The first chapter is focused on the “Becoming Swadeshi” movement which explores the origins of Tata group in cotton and opium trades across Indian ocean in mid 19th century. The author shows how the success of textile and steel companies managed by Tata Sons, the main holding company in Bombay, depended on financial connections and overseas market access cultivated by less known R.D Tata and Co. in Shanghai and Hong Kong. The global crisis followed by Great Depression led to the demise of these companies. At the same time, the group faced contradiction, political pressures from Indian nationalists to resolve the paradox between their svadeshi claims and reliance on foreign finance and technology. The crisis forced the sale of major assets to American and British and enhanced the need for tariff protection from colonial state. This chapter also introduces the man of Tata, founder Jamsetji Tata, who set the country on a path of industrial revolution and economic liberation. Jamsetji Tata was a perspicacious and visionary leader who believed that India has great potential and growth opportunities if channelized in the right direction. His surveillance of untilled industrial fields in India, he perceived the benefits it could gain through science and technology. His thought process behind raising a Steel industry and creation of hydroelectric power stations was stupendous as it would be the cheapest source of energy. Jamsetji was a man full of not only ideas, but also had the ability to execute those ideas into reality.

One of the few challenges detailed by Mircea about being swadeshi was that they had to be defensive about their employment of foreigners under the non-cooperation movement driven under Gandhiji. Recruiting foreigners in upper-level management was unavoidable as the group had to depend on technical expert knowledge of foreigners. Later, as Tata Iron and Steel Co. (TISCO) was dwindling down with financial losses and as they were unable to raise capital, rumors spread that Dorabji Tata was contemplating selling TISCO agency to American group, either GE or US Steel. Tata had to rethink so many of their decisions of a well established empire as there were closely tied with British and American ties, but the swadeshi movement put them in a tough spot. Despite of a lack of consensus within the nationalist movement on the desirability of allowing foreign capital in swadeshi enterprises, there was a difference between technological depedence and outright managerial control. Even as successive crises pushed the Tatas to abandon overseas trade and turn to internal markets, that very same perilous financial landscape forced them to rely on their American connections more than ever before.

A fundamental contradiction lay at the heart of swadeshi imperative. To build a self-sufficient national economy through industrialization required cultivating complementary global networks of trade and finance, which were more vulnerable to systemic shocks. A wide constellation of relationships stretched beyond the Bristish Empire, from Indian Ocea to China, Japan and United States through which the Indian capital moved, multiplies and occasionally disappeared too when hit by Great Depression and such global events.

The author proceeds narrating the challenges that the group went through for resource extraction in India, for instance land acquisition for TISCO plant. Between 1909 and 1919, the company secured private leases from local zamindars while relying on Land Acquisition Act to secure tenurial rights. By exploiting these ambiguities and contradictions, Tata seized the weapons of colonial “lawfare” deploying them against the weak while also turning them against the state. Slowly, Tata became the quasi-sovereign power, simultaneously acting as employer, landlord and municipal government. TISCO took on the employer, landlord and municipal government functions in Jamshedpur and exercised fragmented form of corporate sovereignty challenged above by state and below my workers and residents. Slowly problems of urban and workers (rural) demanded attention. Foreign (covenant) employees — Americans, British and German lived in opulent bungalows, skilled Indian workers acquired the quarters on the land nearby. But the adivasis, the majority of the workers had no good place and were allowed to roam around.

Few words from Beatrice Webb as he was so impressed with Tatas as compared with other plutocracies, these Indians are aristocratic in appearance and manners but far superior in personal distinction, to Government house or Indian English official world. Later came a report began with memo by Padshah who advocated organizing town into self contained neighborhoods governed by panchyats. The aim was to retain the old Indian village life based on ideals of co-operation and self-sufficiency. Anxieties over the adaptability of migrant workers to the altered rhythm of industrial labor and urban life permeated the report. Padshah’s optimistic vision of a synthesis between tradition and modernity and Webb’s declinist warnings were two sides of the same coin. This memo had a section on how much fatigue the workers faced due to long working hours and length of the shifts. The report critiqued irregular patterns of work, women coolies who made up one sixth of the workforce took surreptitious breaks in between work. There was a companion report that came out by Dr. Harold H. Mann pointing towards careful scientific inquiries to find good conditions at work and optimum work hours. Sidney Webb praised Mann report to be more comprehensive making it evident that whole structure welfare at Jamshedpur was not so far advanced as they had proposed.

The multistory chawls built in Bombay were notoriously un-sanitized which led to the spread of various fatal diseases. Padshah further conflated specific limitations of the chawl with company provided housing and how it is destructive for adivsais to survive in such conditions, both medically and financially. With that TISCO management came up with a brilliant solution of building hexagonal collie towns whose design helped in great convenience for services such as water supply and drainage, provided more space to each of house. This design was a fantastic balance between modernism and localized primitivism.

But things did not resolve after solving this challenge, next difficulty was introduction of International regulations affecting India’s prestige in the world, availability of more sophisticated and advances scientific management changed employer’s minds. International Labor Organization (ILO)’s attempt to globalize regulations failed to take into account the relations between Indian industrial labor and agriculture and religious festivals. TISCO employed large number of women, but they were oppressed due to the nature of the steel industry work.

At the end, the company resisted expert recommendations for improving working conditions, womens’ plight continued on the grounds of exceptionalism and difference, centered on figure of adivasi worker. There were violent strikes followed after this in 1920s, Jamshedpur became flashpoint for wider anxieties and had to walk on a tight rope, maintain the right balance and integrating “primitive” labor in modern industry.

The next section is focused on Tatas world of philanthropy which varied from local communities to cosmopolitan and nation building projects. Their philanthropy was deeply connected to it vision. To give a perspective about Tatas philanthropy, there was a cartoon that depicted their philanthropy as a bridge between earlier mercantile charity in India which was community based, and the needs to a modern nation. the colonial government suspected that Jamsetji was merely using it as a means to obtain a title of nobility for himself in keeping with the perceived tendency among wealthy Indians to align charity with self-interest. Jamsetji’s philosophy of “constructive philanthropy” anticipated the developmental needs of nation, which put him in odds with colonial state. His vision of economic swadeshi, in which private industry would build the material infrastructure of Indian economy through textile mills, steel plants and hydroelectric dams also entailed a complimentary infrastructure of knowledge production and exchange. Jamsetji Tata’s interest in technological innovation led to the establishment of Indian Institute of Science (IISc), which is India’s first research university devoted to science and engineering. Protracted negotiations between Jamsetji’s heirs and recalcitrant colonial officials over the endowment of IISc were resolved by Charitable Endowments Act. This outcome set the precent whereby institutions funded by Tata charitable trusts were brought under state control. The Tata trusts became conduits for transnational flows of scientific expertise. The Tata Institute of Social Sciences (TISS) blended practical social work and social science research. Commitments to medical research for leukemia and radium therapy led to creation of Tata Institute of Fundamental Research (TIFR) which contributed to India’s atomic program. After independence, philanthropy was subordinated to the needs of group companies and competed more deirectly with the state in service provision.

At the end, the Tata philanthropy remains an inconvenient case study, difficult to derive and specific conclusion. For some in the fields of business and management said the philanthropy is based on ethical precept (Humata, Hukhta, Huvarshta (Good thoughts, Good words, Good deeds). But Jamsetji’s royalty and philanthropy is so immense and widespread, its beyond understanding at times. Jamsetji’s contribution to inoculation, agricultural experiments especially the Egyptian cotton that grew from a personal plot at Navsari, promoted numerous experiments for nationwide trails to facilitate the best use of technology for human benefits. He envisioned both large landowners and millions of small cultivators adopting his scientific mindset and following his entrepreneurial example.

Later, Ratanji Tata followed his footsteps and one of his notable contributions was towards Gandhiji’s campaign for right of Indians in South Africa. His donations spans across various domains, like the Zoroastrian Girls School Association and Seva Sadam which was founded against child marriage. His wife was active in several such campaigns and fought towards the stoppage of child marriage and various other issues that Parsi communities faced. This way, Tata philanthropy continued to play pioneering entrepreneurial role in areas that state did not reach. But it also shadowed the state along the way, reminding the public of the contrast between the donor’s “personal touch” and bureaucrat’s heavy hand.

Mircea steers the course of this book towards the shifting strategies of the Tatas in the context of declining British influence and growing Soviet-American competition, particularly the quest for private foreign investment as a counterweight to centralized state planning. Mircea argues for the importance of foreign capital as an overlooked dimension to the political economy of decolonizing India. Despite their fears about each others designs on the subcontinent, British and American officials only took in interest in India’s planned industrial development after the involvement of Soviet Union. Soviet succored to public sector projects attracted American capital to India, which ended up strengthening up the Tatas than any others. Tata’s successfully approached World Bank in 1957–58 to finance the expansion of Jamshedpur steel plant as the cash strapped Indian state suffered from a debilitating foreign exchange crisis.

The next section was my personal favorite which goes through the transition of Tatas from paternalism (the policy or practice on the part of people in positions of authority of restricting the freedom and responsibilities of those subordinate to them in the subordinates’ supposed best interest) as an adhoc mode of control labor towards scientific management as a more systematic approach. After the World War II, TISCO again sought guidance from foreign experts including industrial psychologists. At first, the management appointed a personnel department to deal with workers directly, followed by company union. The inadequency of these measures was brutally exposed in last violent strike, but an unstable mix of paternalism and technocracy (an elite of technical experts) achieved industrial peace in the long run.

The journey of Taylorism (scientific management/methods to analyze the efficient production process in order to increase productivity) begins with Fredrick Taylor with Ford’s automobile assembly line which aimed to turn human beings into machines and corporations into bureaucracies. Mircea iterates various such examples including Dongya corporation in China which mixed paternalism, hygienic practice, consumer capitalism, industrialism, modernity in order to satisfy their own goals. Personalized bonds between employers and workers were a defining feature of industrial modernity everywhere, as the abstractions of market were embedded in social relations in myriad ways.

Paternalism remained a useful fallback option when the advice of experts proved unpalatable or when collective bargaining broke down. Mircea continues detailing about Tata faced an identity crisis over the labor policy and fraught relationship with Nehruvian state. With its mission to drive its goals, Naval Tata summarized the thesis of his book saying that “Tatas through their benevolent activities propagated socialism to strengthen capitalism”. Tatas next step in constructing a shared corporate identity was the Tata Staff College opened in 1956 on Turf Club in Poona. It has a dual purpose. Managers from different companies would get together and develop a corporate sense ensuring that the Tata tradition continues. In the process they would become effective public advocates for business countering the socialist agenda of the ruling Congress party. Moreover the rise of Indian Institute of Management (IIMs) and Indian Institure of Technology (IITs) threatened to make their privileged role as providers ofexpertise and technial training obsolete as well. Tata was more destined to fulfill very important purpose, to provide the right atmosphere and right tradition which is very critical these days. Tata Consulting Services (TCS) also started giving talks about electronic data processing and information sharing etc. However, in this rarefield environment, there was a tendency to think “Tata” way rather than “Indian” way.

The further section talks about the Tata’s public relations efforts, focusing on art works and photographs depicting the adivasi body at work in Jamshedpur steel plant (Men of Steel), which deliberately mirrored statist troped of social progress through industry. Later, The Story of Steel published in February 1958 was to boost internal morale and score a political point. As J.R.D Tata’s foreword put it, TISCO has provided living that private enterprise cannot deliver the goods, as they are inspired by selfish motives and does not serve peoples needs. The book contained several smiling adivasi working in the company’s mines and reproduction of Langhammer’s paintings of Jamshedpur. While Jamshedpur was engulfed in violence and political intrigue, these artistic works provided comforts of an alternative history, where private industry fulfilled the nation’s cherished hopes for development and social progress and when men met machines on equal terms.

Jamsetji’s aura became much more powerful after his death, available as a free-floating signifier to resolve tensions within the group or meet new political challenges. Tata stands out among comparable business dynasties compared to other groups. The construction of Tata’s identity and tradition in 1950s smoothed over the contradictions of belonging to the nation and the world.

In the last section of the book, the author focusses on the social responsibilities of business which connects the internal codification of ethics and values within Tata group. During that time, Tata was confronted with the rise of bureaucratic planning, restrictive licensing system to curb monopoly power, and the occasional threat of nationalization. The Tatas responded by drawing on a disparate set of ideas including Gandhiji’s concept of “trusteeship”, democratic socialism and free market liberalism to enhance their legitimacy. The key figures who made this intellectual convergence possible were JP Narayan and Minoo Masani, a close advisor to the Tatas. Mircea shares details about the series of initiatives spearheaded by JP and Masani which defined the practice of Corporate Social Responsibility (CSR) in India as a set of voluntary codes and commitments. Tata broke from the Gandhians by the time Emergency in 1975–77, preferring to sponsor concrete local projects such as model villages and slum resettlement schemes and embracing the state’s authoritarian productivity drive.

In conclusion, I believe Tatas are one of those eccentric group of industries which flourished so well under the leadership of iconic Jamsetji Tata. His broad vision of making India independent and manufacturing hub of basic affordable infrastructure was paradoxical to the situation at that time. As India was ruled by British empire during this time, Tatas went through difficulties, challenges, but the Tatas were so driven and mission oriented that they confronted so many tough situations standing tall and following their vision. They were quite unconventional in the way of thinking (mixing rural community based life in India with modernity) and to think this boldly at that time was next to impossible. Yet they sticked to their mission, continued in their efforts to make that differnece happen and undertook actions of making India a development hub of building infrastructure. There are numerous instances stated by the author where Tata has preferred to not getting subjected under any pressure, be it political, or social or economic. But at the same time, they always stood up with courage each time, adeptly handled situations, stated their principles boldly, absorbed public condemnation, strikes and other innumerable humiliating instances. The Tatas have experienced one of the toughest roller coaster ride with challenges coming from all possible directions. With this, they always worked and kept on accomplishing their mission. which is simply laudable. Great applause to the Tata group, the founder Jamsetji Tata where it all started for being what they are till today. Great learning by studying through their journey in this book

Reference — https://www.tata.com/newsroom/heritage/tata-svadeshi-before-independence