Was Tata 'Swadeshi' Enough?

This is an extract from Mircea Raianu's Tata: The Global Corporation That Built Indian Capitalism published by Harvard University Press

In April 1920, the Bombay Chronicle published “The House of Tatas: Its Future and India’s Prosperity,” a damning exposé subtitled “A Danger to Jamshedji’s Life-Work.” The anonymous author claimed to be a “Friend of the Family” with special knowledge of the inner workings of the Bombay head office. The article began by recounting Jamsetji’s painstaking efforts to raise a business house that once enjoyed “no special place of honour” to a position of unchallenged preeminence. At the time of writing, Tata’s financial interests were “bigger than those of any State and in a couple of years they will be as big as the budget figures of a great Presidency.” However, the author warned that Jamsetji’s successors were jeopardizing his illustrious legacy. R. D. Tata’s cosmopolitanism came under special scrutiny, as “a French subject and married to a French lady” who could not be reliably looked upon to “maintain any National sentiments connected with the House.” The author reserved his greatest scorn for B. J. Padshah, “a dictatorial professor” who “professes a deep national life, but in practice has little faith in the capacity of Indians for any responsible positions.” Padshah’s preference for recruiting foreign personnel betrayed his belief “that the white-skinned blonde is a better man to control our destinies than a dusky Indian.” How sincere, then, was the Tatas’ appeal to swadeshi sentiments? The article concluded by recommending the establishment of “a great Indian Industrial Tata Service” to train indigenous management cadres and technical experts as a “bulwark against foreign industrial invasions.”

The criticism in the Bombay Chronicle may have come from the proverbial disgruntled employee, but it clearly stung. As the Indian National Congress launched the Non-cooperation movement in the spring and summer of 1920, a campaign of mass resistance under the charismatic leadership of Mohandas K. Gandhi, the Tatas found themselves on the defensive regarding their employment of foreigners. An anonymous letter to the editor in the Bombay Chronicle defended Padshah against the charge of “nervous veneration for the ‘white-skinned blonde,’” claiming he was “an embodiment of the best of our national aspirations.” Recruiting foreigners in upper-level management positions was unavoidable, the letter claimed, because “in highly technical services, we have still to depend on expert knowledge.” Dorabji Tata made a similar point at one of the “stormy” shareholder meetings of the Tata Industrial Bank, asking “the critics whether they would prefer not to have an industry at all or have an industry with the aid of foreign technicians.” But these arguments failed to hold sway in a charged political atmosphere.

TISCO was on the front lines of the battle over Indianization. As early as 1913, when the plant was barely one year old, the Calcutta-based nationalist periodical Modern Review lamented the lack of qualified Indian employees and the bias toward American engineers. A strike by foreign or “covenanted” workers in August 1920, one of the first rumblings of labor unrest at TISCO, increased the sense of urgency felt by management to correct the imbalance. One year later, the Jamshedpur Technical Institute ( JTI) opened with much fanfare, promising to cultivate Indian talent along the lines of the successful apprenticeship scheme at the Empress Mills. The curriculum combined practical and theoretical training, attracting more than 2,600 candidates from across India in its second year and offering a viable alternative to colonial engineering colleges. The ratio of covenanted to Indian labor employed in the Jamshedpur works fell by two-thirds within three years. R. D. Tata boasted to his close friend, the nationalist leader Motilal Nehru, that the number of Europeans employed in the sheet mills was reduced from 240 to 60 by reorganizing shifts. Yet, management conceded that the JTI was “gradually drifting away from the main object,” only turning out qualified job candidates below the rank of foreman. The highest echelons remained the exclusive preserve of Americans until the following decade.

Apart from being laggards in Indianization, the Tatas were also charged with selling off what had effectively become national assets. The American connection, which had served them well as a counterweight to the colonial state, became a full-blown scandal. A few months after the incendiary “House of Tata” article, the Bombay Chronicle published a short follow-up titled “A Tata Contract.” TISCO had agreed to supply the total output of its new bar mill to the Truscon Steel Company of Youngstown, Ohio, for the manufacture of reinforced concrete buildings. The article claimed this monopoly would “spell a great disaster to the economic interests of the country, throwing Indian industries at the mercy of a foreign firm.” TISCO’s acting general manager, S. M. Marshall, was blamed for the decision. The agreement with Truscon fell through due to the Americans’ unwillingness to compete with Belgian imports, but the company’s reputation suffered. TISCO was willing to take the risk in the first place because its financial position was rapidly deteriorating, with few good options for disposing of surplus product during the postwar slump. In a memorandum to the Government of India in 1923, the company announced it was “in danger of being extinguished for want of working capital.”Protective tariffs on steel imposed the following year provided some respite, but the future was clouded with uncertainty. Rumors spread that Dorabji Tata was contemplating selling the TISCO agency to an American group, either GE or US Steel.

The hydroelectric companies’ position was not much better. As shareholders began to default, the Tata Power Company requested a £1,000,000 guarantee on purchases of plant and machinery under the Trade Facilities Act, hoping to induce British engineering companies to invest. Support in London was lukewarm due to fears of American competition, as well as to the perceived “intense anti-English feeling of the Parsee section of the community” in the aftermath of the Non-cooperation movement. In 1925, the three Tata electric companies, whose finances were in varying shape, were amalgamated into what was optimistically billed as “one of the safest investments in the world.”

(This is an extract from Tata: The Global Corporation That Built Indian Capitalism published by Harvard University Press)


Take a look at what’s new in the business section of Amazon’s book shelf

My Life in Full: Work, Family, and Our Future

Indra K. Nooyi (September 2021)

The former CEO of PepsiCo walks us through the events that shaped her—from her childhood in 1960s India to her rise as a corporate consultant and strategist who captured the most senior executive ranks.

The Everyday Hero Manifesto

Robin Sharma (September 2021)

Bestselling author Robin Sharma delves into the hidden habits used by many of the world’s most creative and successful people to realise their visionary ambitions.  

Diamonds in the Dust: Consistent Compounding for Extraordinary Wealth Creation

Saurabh Mukherjea (August 2021)

In this book, Mukherjea offers Indian savers investment techniques to identify clean, well-managed Indian companies that have consistently generated outsized returns for investors.

The Story of Tata: 1868 to 2021

Peter Casey (August 2021)

This book is the first authorised biography on the Tata Group and includes details about the Tata-Mistry legal battle, exclusive interviews with Ratan Tata, and rare photographs of the Tata family.

The Psychology of Money

Morgan Housel (July 2021)

The Psychology of Money comprises 19 short stories exploring the strange ways people think about money and how to make better sense of one of life’s most important matters.