NEW DELHI: In India, the Tata name is ubiquitous. People see it on the packet of tea that wakes them up in the morning, on the buses that carry them to work, and in the hotels where they go for a drink after work.
No other name is as representative of the possibilities, and failures, of the nation’s private sector – and so all Indians will have felt the passing of the group’s patriarch Ratan Tata this week.
In his ambition and through his mistakes, Tata captured the potential of a global, modern India. The centuries-old conglomerate he led has grown along with his country, from the first stirrings of an industrial economy in the subcontinent with its steel plant in Jamshedpur, through the dreary years of socialism and the burst of post-liberalisation optimism.
Ratan Tata took over in 1990, a year before India began to deregulate and open up. Under him, a group that made steel, trucks and chemicals quickly diversified into small cars and information technology.
The shift exemplified India’s move away from a state-directed, capital-intensive growth model to one based on consumer demand and services exports. Today, Tata Consultancy Services accounts for the largest share of the group’s value.
TRANSFORMING INDIA’S MANUFACTURING HAS PROVEN DIFFICULTUnfortunately, de-industrialisation has not worked out so well for the rest of the country. A services-led economy can’t quite produce enough jobs, nor does it appear able to ensure economic security.
India’s current government is desperately working to turn back the clock with sweeping industrial policies. But transforming a high-cost, relatively uncompetitive manufacturing sector has proved to be a difficult task.
Perhaps that’s because Prime Minister Narendra Modi’s efforts have tended to focus on tariffs, subsidies and protection for domestic manufacturers, rather than on improving productivity. The government would like companies to stay home and indigenise their entire supply chains.
Tata Sons Chief Executive Officer N Chandrashekharan agreeably promised Modi in 2022 at the opening of a new airplane plant that “Tata Group will now be able to take aluminium ingots at one end of the value stream and turn it into an Airbus C295 aircraft for the Indian Air Force at the other.” The Tatas are also building, in response to a push from the government, three semiconductor fabrication factories and one chip testing and assembly complex.
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Commentary: Why India will become a superpower A BELIEF THAT INDIAN COMPANIES SHOULD BE GLOBALRatan Tata’s own instincts seemed to have nudged him in a different direction. While he never gave up on manufacturing, he always believed that Indian companies should be global.
He used Tata Consultancy Services’ profits to make big bets on both – wagers that didn’t always pay off. In 2008, Tata Motors bought Jaguar Land Rover. That deal might be considered a success, given that the company reported its highest revenues since 2015 last year.
Other decisions don’t look so good in hindsight. In 2007, Tata bought Corus Group, which made steel in the plants that used to belong to the Dutch and British national producers, Koninklijke Hoogovens and British Steel, respectively.
Tata probably overpaid and has lost billions on that bet; the former British Steel’s last blast furnace just shut down. The week that Ratan Tata passed is also the first week in centuries that no steel is being poured in the United Kingdom.
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Commentary: India overtakes China as most populous country, but will it be demographic dividend or disaster? WHAT INDIA COULD BECOMENevertheless, India trusted his judgement, even in matters of politics: When Tata Motors picked Modi-run Gujarat as the location for a new car factory in 2008, it was seen as a sign that the private sector trusted then-controversial Modi above all other chief ministers. The country followed Tata’s lead a few years later.
Why not also back his commercial instincts? India’s ambitions should be global, not local. Its companies should manufacture in and for the world, not just focus on the domestic market.
Whatever his faults, Ratan Tata always benchmarked himself and his group’s products against the world’s best. The rest of India should, too.
I grew up in Jamshedpur, the beautiful company town that the Tatas built around their giant steel plant. Ratan Tata was already a larger-than-life figure then. Jamshedpur, with its world-class facilities, its orderliness and its productivity, seemed a harbinger of what India could become.
The country may not have lived up to that promise yet, but, like Ratan Tata, it shouldn’t stop believing.