Tata Family Enterprises

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Tata Family Enterprises

The Indian Tata family enterprises began in 1850 when Nusserwanji Tata (1822–1886) started trading cotton and opium to Japan and China, and bringing tea, silk goods, camphor, cinnamon, copper, brass, and China gold to India. Nusserwanji Tata and his son Jamshetji N. Tata (1839–1904), who joined him in 1858, became wealthy between 1862 and 1867 by shipping large amounts of cotton to Liverpool during the U.S. Civil War, and later by providing supplies to the British Indian army during the 1867 invasion of Abyssinia. Jamshetji Tata used his share of the fortune to extend his trading in Shanghai and Yokohama, and he opened branches in Paris, London, and New York supplying Indian cotton, Persian Gulf pearls, and opium. He also started investing in real estate, and built several cotton mills and the Taj Mahal Hotel in Bombay (Mumbai). He tried replacing imported British yarn and using finer-spun yarn to weave finer cloth from Indian cotton. In 1883 he proposed plans for a large-scale steel industry, a hydroelectric syndicate, and an institute of science. In 1887 he established Tata Sons Private Limited (in 1917 it was renamed Tata Sons and Company), which was not linked to production or sales but to net profit. Between 1916 and 1939 Tata Sons grew to be a giant interlocking managing agency with interests in finance, real estate, trading, and industrial ventures.

DEBATE OVER EMPIRE AND DEVELOPMENT

After a series of famines, many Indian nationalist leaders, who had supported British rule as a "progressive" force for modernization, began to blame British rule for draining India's wealth and perpetuating poverty. Nationalists also believed that India's poverty could be eliminated only by rapid industrialization with the help of colonial government protection and patronage. These leaders began investing in various industrial ventures to set an example of self-help, and they later supported the Swadeshi (self-reliance) movement. But the British colonial government insisted that they were making India prosperous through good governance, law and order, and the introduction of railways.

While benefiting from the Swadeshi movement in raising capital for his 1907 steel project, Tata cultivated a public image both as a loyal colonial subject of Britain (through published letters) and as a nationalist by (reluctantly) donating funds for the Indian National Congress Party's annual session. His efforts, and the persistent pressures of nationalist leaders and the Swadeshi movement bore fruit as British steel started losing its competition with Germany and the United States, and no British capitalists showed any interest in making steel in India. The British colonial government, anticipating a possible world war and hoping to keep control over India's steel market, allowed Tata to invest in the steel industry and promised a market for its products. The Indian National Congress Party declared Tata's steel company a national industry and helped it control its labor unrest from 1920 to 1946.

Until World War I Tata steel survived without protection by selling pig iron to Burma, Ceylon, Java, China, Manchuria, Japan, Australia, New Zealand, and the United States. By 1928 to 1929 Tata Iron and Steel Company (TISCO) was the cheapest large-scale producer of pig iron in the world. TISCO opened offices in New York and London, and new industrial subsidiaries to absorb its surplus pig iron and steel.

Furthermore, Tata gained the government's goodwill during World War I by supplying all its steel for war purposes at a loss. In turn, the colonial government provided tariff protection to TISCO in 1924 against dumping by Germany and the United States. TISCO flourished under protection, and it remained until 1946 the dominant source of steel in India. During World War II Tata Sons assured British officials of their complete support. Homi Mody (1881–1969), one of the directors of Tata Sons, joined the viceroy's executive council in 1941, supporting the brutal measures used to quell an August rebellion. But after India's independence in 1947 Tata Sons tried to build their image as nationalists.

Tata Sons, a managing agency for all Tata enterprises, was involved in drawing a "Bombay Plan" visualizing the doubling of per capita national income within fifteen years through quick development of basic industries. But lacking modern technology, Indian capitalists were compelled to seek foreign collaborators. Tata Enterprises also received tariff protection in independent India, which helped it to expand and flourish.

EXPANSION OF TATA FAMILY ENTERPRISES AFTER INDEPENDENCE

War demands and enforced import substitution led to advances in the areas of textile, iron and steel, cement, and paper, and to some entry into engineering and chemicals—all of which the Tatas invested in—but the British government continued obstructing the development of indigenous shipping and automobile and aircraft production. After independence the Tatas invested in motor vehicles, exporting them to Europe, Australia, South East Asia, Middle Eastern countries, and Africa. The Tatas also collaborated with Japanese steel companies. Tata started India's first airmail service in 1932, and in 1946 Tata Airlines went public, becoming a joint venture with the government called Air India Limited. In 1945 the Tata Institute for Fundamental Research came into being. In 1954 the Tatas started manufacturing air conditioners and providing engineering services. They soon opened their offices for this in the United Arab Emirates, Hong Kong, and Singapore.

In the early 2000s, the Tata family now had an empire of some eighty companies in various business sectors. Because of the deregulations of the 1990s and India's opening up to foreign competitors have forced withdrawal from other fields, and Tata now focuses on metals and minerals, automotive and engineering, chemicals, agribusiness, consumer products, hotels, information technology, and energy.

TATA ENTERPRISES AND JOINT VENTURES

Tata expanded its empire through joint ventures with foreign companies. Tata Automotive is involved in joint ventures with the United States, France, Italy, Japan, Spain, and South Korea. Tata Power has built numerous power projects in the Middle East and Africa. Tata Chemical began in 1939 exporting to the United Kingdom, Indonesia, Nepal, nations of the Middle East, and Sri Lanka. Electronic products are jointly manufactured with U.S. and Japanese firms. Tata Mutual Fund and Tata International were created in 1962 for global trade and its core business operations span to 100 countries. Tata has overseas subsidiaries for steel, automotive, tea, leather, leather products, consultancy, ferro alloy, bicycles, pottery, agriculture machinery, electrical and electronic products, and textiles and garments. Its Tata Solar Power products are exported to at least twenty-five countries worldwide. Its tea business has a joint venture with the United Kingdom: Tetley Group sells tea in Europe, the Gulf region, and the United States. Tata Ceramics also sells its products worldwide. More recently, Tata Internet, Tata Cellular Phone, and Tata Telecom have also started transnational ventures. Tata McGraw-Hill Publishing Company, a subsidiary of McGraw-Hill, publishes books in the fields of science, technology, computers, medicine, and management. In 2001 Tata Consultancy existed in fifty-five countries in collaboration with IBM, Netscape, Microsoft, SAP, and Oracle.

SEE ALSO Empire, British; Import Substitution; India; Industrialization; Iron and Steel; Mumbai; Nationalism; Tea; Textiles.

BIBLIOGRAPHY

Bahl, Vinay. The Making of the Indian Working Class: A Case Study of Tata Iron and Steel Company, 1880–1946. New Delhi: Sage, 1995.

Chandra, Bipin. Rise and Growth of Economic Nationalism in India: Economic Policies of Indian National Leadership, 1881–1915. New Delhi: People's Publishing House, 1966.

Harris, Frank R. Jamshetji Nusserwanji Tata: A Chronicle of His Life. London and Bombay: Oxford University Press, 1958.

Saklatvala, B. S., and Khosla, K. Builders of Modern India: Jamsetji Tata. New Delhi: Ministry of Information and Broadcasting, 1980.

Sen, Sunil K. The House of Tata Calcutta. Calcutta: Progressive Publishers, 1975.

Vinay Bahl

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