The Tata Group Is Everything Wrong With Indian Capitalism

The megacorporation Tata has shaped Indian capitalism for 150 years. Despite its best efforts to sustain an image as an ethical company, Tata's roots in war profiteering and the opium trade, and its sophisticated suppression of worker organizing, is testament to the fact that "ethical capitalism" is only ever a contradiction in terms.

Ratan Tata, chairman of the philanthropic wing of Tata Group and former CEO, speaks in Mumbai in 2008. (Indranil Mukherjee/AFP via Getty Images)

There is a persistent legend about the origins of the ornate, five-star Taj Mahal Palace Hotel in Mumbai (formerly Bombay), India’s financial capital. The hotel opened in 1903, when British colonial rule in India was at its peak. The genesis of the hotel came, so the story goes, when the budding industrialist Jamsetji Tata — founder of the Tata Group — was denied entry into a British hotel. In a fit of nationalist pride, and in protest against the colonial exclusion he experienced, he decided to build his own hotel, one that would be grander and more imposing than anything the British had built.

In the early pages Tata: The Global Corporation that Built Indian Capitalism, the historian Mircea Raianu notes the implausibility of this story, going so far as to label it a myth and pointing out that “overt color bars were rare in Bombay.” And yet the myth persists, in part because it accords with the nationalist image the Tata Group wishes to project — a model of ethical capitalism, generating profits in service of the nation.

Jamsetji Tata and his family earned their early wealth as commercial capitalists involved in overseas trade, but they built their nationalist reputation as cutting-edge homegrown industrialists, founders of major textile mills and later a leading steel plant. Since then, the group has expanded enormously, keeping pace with technological and economic changes to play a leading role in sectors as diverse as chemicals, aviation, automobiles, information technology, and business consulting. In the past few decades, it has further burnished its credentials, and stoked nationalist pride, through its acquisition of international companies like the tea brand Tetley, the steel giant Corus, and Jaguar Land Rover.

Throughout all these changes, Tata has remained, as Raianu puts it, “at the top of the corporate pyramid” in India. And through canny branding and a long-standing interest in philanthropy, Tata has preserved its reputation as an upstanding and unblemished corporate citizen, supposedly above the fray of corruption that marks economic life in the country.

Raianu’s book, as he makes clear, is not an exposé or a denunciation of the Tata myth; rather, it is a close analysis of the company’s historical development, particularly the way it was able to weather a series of major political and economic changes, including Indian independence and the rise of state planning. A work of scrupulous historical scholarship, the book takes the Tatas’ own archives as its main source and generally refrains from criticism. The conclusion, for instance, only notes that the company embodies both “the promises and disappointments of capitalism.” Despite the book’s studied neutrality, there is nonetheless much of interest for readers with a critical view of capitalism. Even with its limitations, Raianu’s work does poke holes in the carefully maintained image of the Tata Group and shed light on the history of capitalism in India — and globally.

Beyond the Myth

Marx famously noted that capital comes into the world “dripping from head to toe, from every pore, with blood and dirt.” It’s a description that could very well apply to the origins of the Tatas’ wealth. Much has been made of the company’s early involvement in the opium trade — India’s largest export commodity for much of the 1800s and a backbone of the British imperial economy. Opium was essentially forced on China at the barrel of a gun, with the British triumphing in the two bloody opium wars. Raianu outlines the Tatas’ involvement in “what was, in essence, state-sanctioned drug trafficking,” but he emphasizes that the Tatas were not one of the biggest players in this game. Indeed, as Raianu notes, their early fortunes were almost wiped out during one of the inevitable crashes in this highly speculative trade.

Instead, Raianu writes, “the real scandal at the root of the Tata fortune . . . was insider trading and corruption in a nineteenth-­century version of the military-­industrial complex, revealing the nexus of Indian capital and imperial power.”

The Tatas’ fortunes were revived when they won a contract to supply a British military force in the former Ethiopian Empire of Abyssinia, and then artificially inflated the prices of everything they sold to the British to maximize their profits.

This, of course, suggests a very different origin — and a very different relationship with imperialism — than the one embodied in the Taj Mahal Palace Hotel myth.

Beyond these early roots, Raianu’s book traces Tata’s development amid drastic political and economic changes in India, including the rise of the nationalist movement and the shift from a globe-spanning imperial economy to the more bounded economy of the emerging nation-state. As Raianu shows, Tata navigated these changes by turning inward to some extent, creating and burnishing its nationalist credentials with industrial projects in the interiors of India. Nonetheless, Raianu argues, the company’s ultimate success lay in the maintenance and expansion of its international connections in finance, technical expertise, and knowledge production.

It is easy to read Tata’s nationalist self-image as well as its philanthropic work cynically, as mere fig leaves covering a naked grab for profits and power. Raianu is wary of such readings, and his dive into the Tata archives show that company leaders and managers had real, spirited debates and disagreements about the social and political role of the company, the way that it could or should contribute to society, and its relationship to the state.

Though the philanthropy — setting up educational institutions, for example — had some independence from the company’s business pursuits, it nonetheless remained tethered to the demands of Tata’s business model and profit motive, as Raianu shows. This was especially the case with the Tata Institute of Social Science, which was established in 1936 with the main ambition, according to Raianu, “to adapt foreign expertise to Indian conditions in the ser­vice of social harmony and, ultimately, the salvation of industrial capitalism as a ­whole.” Research into labor conditions, Raianu writes, was treated as “a panacea for class struggle” — essentially, a way to keep restive workers under control.

Growing Influence

Due to its early, heavy involvement in India’s textile and steel sectors, the Tata Group knew its profits depended on a pliable industrial workforce. At the same time, it was gripped with anxiety that rapid industrialization would lead to the breakdown of traditional bonds like those of caste, which would in turn bring alienation and worker unrest. Of course, the exploitative conditions of capitalism itself were never blamed for workers’ protest.

Marx and Engels, of course, embraced the solvent power of capitalism, but defenders of the system, including companies like Tata, feared this very power.

The history of capitalism in India, however, indicates that Marx and Engels, as well as pro-capitalist social scientists, may have overestimated capitalism’s ability to break down older social ties like caste. The case of India shows that caste, rather than melting into air, is transformed by capitalism, even molded to support the accumulation of capital. In the case of Tata, for instance, this means promoting segregation along caste and regional lines, not just in its factories but even in the organization of its factory towns.

With the benefit of hindsight, it is easier to see the hollowness of claims of capitalism as a progressive social force in India. And yet, perhaps because of the sophistication of their attempts at building hegemony (including through their philanthropic and educational initiatives), companies like Tata were able to build legitimacy not just with the general public but even among some sections of the Left.

Indeed, as Raianu points out, the first major split in the Communist Party of India (CPI) was precisely over how to evaluate the country’s bourgeoisie, as well as its relationship to the state. One side of the party, generally aligned with the USSR — which had given support to the postcolonial Indian state, largely for pragmatic Cold War political reasons — tried to see a potentially progressive aspect to at least some portion of the bourgeoisie; meanwhile, the other side of the party, soon to become the CPI (Marxist) — generally aligned with China — saw Indian capital as inevitably comprador, a mere puppet of international capital.

As Raianu’s book shows us, corporations like Tata fit poorly into this binary. They were able to achieve legitimacy in part because they were not mere puppets; they spearheaded industrialization processes in the interiors of India, and, while they kept international ties, they built up a thoroughly Indian bourgeoisie. The inability to come to terms with such homegrown capitalists — and, indeed, an overestimation of their progressive function by some on the Left — continued well beyond the CPI-CPM split. For instance, as many left analyses have noted, the beginning of the decline of decades of CPM rule in the state of West Bengal came with protests — violently squelched by the CPM government — against state attempts to forcefully acquire land for Tata to build its “people’s car,” the Nano, in the early 2000s.

Such developments only find brief mention in the book’s epilogue, as the archives, we’re told, peter out in the 1970s — suggesting some of the limitations of basing a study on such a source. The official Tata archives have no trace of the corporation’s more recent, controversial exploits since the 1970s, nor do they include the personal papers of Jamsetji Tata and his sons. Instead, they amount to an exercise in publicity, simultaneously burnishing the company’s image as open and ethical while leaving key parts of its history opaque.

Raianu acknowledges the challenges of working with such an archive, but by ultimately keeping within its boundaries, he leaves unanswered some of the larger questions that his book evokes. For instance, early on, he notes suggestively: “Not only does Tata’s historical trajectory reflect the broad transition [of Indian capitalism] from trade to industry to ser­vices, but it also contains all ­these phases at once, rarely shedding the weight of the past.”

Such a statement suggests that the history of Indian capitalism itself cannot be broken up into neat, discrete time periods. But this gives little sense of what forces or sectors define Indian capitalism today, and what role Tata plays in all this. The book’s subtitle suggests that Tata “built Indian capitalism,” but can a corporation like Tata really be seen as representative of Indian capitalism as a whole, given the widespread presence of petty commodity production, self-employment, and informality in the economy?

For these kinds of questions, one can turn to more explicitly Marxist analyses of Indian capitalism. Raianu himself cites Jairus Banaji and his analysis of the way that the opium trade in India was part of a much larger network of state-aided capital accumulation. This network was dominated by commercial capital, bringing together myriad financiers and speculators in London with an increasingly indebted Indian peasantry, as the British colonial state pushed the cultivation of opium through advances of capital to individual peasants, which they were often unable to repay.

Extending Banaji’s analysis, Aditya Bahl has recently suggested that this kind of commercial capitalism may be gathering power again, in part through the recent, controversial farm laws that seek to throw open the doors of Indian agriculture to the corporate sector, including through the promotion of contract farming. This has sparked widespread protests from farmers who fear that big corporate interests will be able to establish large-scale supply chains and thus dictate agricultural prices, pushing peasants further into debt.

Tata, of course, is not absent in this story, as it seeks to expand its strength in online commerce. It recently acquired a majority stake in the e-commerce platform BigBasket, a popular food delivery service. Meanwhile, the massive farmers’ protest against the farm laws continues, even if it has lost the attention of the media.

A consistent theme from the Tata archives, as Raianu shows us, is anxiety about labor unrest. One wonders, then, what a future historian of capitalism will write about this current, all-important conjuncture in Indian history, as sustained protests forcefully question the self-image of capitalism as a force for the good of the nation.