How Chandrasekaran’s Exit Puts Tata's Digital And Electronics Businesses To A Test

N Chandrasekaran’s decision to step down as Tata Sons chairman has brought renewed attention to two of his biggest bets — Tata Digital and Tata Electronics — as the conglomerate prepares for a leadership transition.

Chandrasekaran, who has led Tata Sons since 2017, will remain chairman until February 2027, giving the group several months to identify his successor.

The incoming chairman will inherit a financially stronger and more diversified group, but will also have to address expensive new ventures that are still some distance from delivering sustained returns.

Together with Air India, Tata Digital and Tata Electronics accounted for nearly ₹29,000 crore in losses in the latest financial year, as per a report by the Times of India (TOI). Of the three, however, the digital and semiconductor businesses could present very different tests of capital allocation and strategy.

Why Did Chandrasekaran Step Down?

Chandrasekaran said on Wednesday that he would not seek another term when his tenure ends in February 2027.

The precise circumstances surrounding his decision remain unclear though there were some wider challenges facing the group, including governance alignment, boardroom tensions, loss-making businesses and the unresolved question of a potential Tata Sons listing.

Harsh Goenka, chairman of RPG Enterprises, described the departure as the end of a “fine manager’s innings”.

“Chandra led TCS to great heights and steered the Tata Group with a steady hand. A few blemishes, digital business and Air India, but overall, a stellar managerial record,” he wrote on X (formerly Twitter).

Tata Digital Faces Sharper Strategic Question

Tata Digital is likely to face the most immediate review under the new leadership. The company reported a consolidated loss of ₹4,974 crore in FY26, widening from ₹4,610 crore in FY25, while revenue rose nearly 12% to ₹35,990 crore.

The group has invested heavily in BigBasket, Tata 1mg, Tata CLiQ, Tata Neu and other digital businesses. The group's investment stand around ₹26,000 crore, as per Business Standard (BS).

The incoming chairman may therefore have to decide whether to continue funding a broad consumer internet ecosystem, focus capital on a few businesses with stronger prospects, or eventually consider restructuring or divestments.

Tata Electronics Needs Patience, And Capital

Tata Electronics presents a different challenge. Unlike Tata Digital, its losses come from building capabilities in capital-intensive sectors with long gestation periods.

It reported a ₹1,611 crore loss in FY26, even as revenue almost doubled and the company reached operating-profit break-even.

Tata Electronics' revenue has crossed ₹1.3 lakh crore, making it the Tata group's fourth-largest company by revenue, as per The Economic Times (ET).

The group is investing nearly ₹91,000 crore in a semiconductor fab at Dholera and another ₹27,000 crore in an upcoming OSAT facility, with support from central and state government subsidies, as per BS.

The Real Test: Deciding Where To Keep Betting

For the next chairman, Tata Digital may be asked to prove its business model. Tata Electronics, meanwhile, may be asked to prove that its massive investment cycle can eventually translate into a globally competitive semiconductor and electronics platform.

How the group handles those two very different challenges could become one of the defining tests of the post-Chandrasekaran era.

The contrast between the two businesses could define the next Tata Sons chairman's approach. Tata Digital must show clearer evidence that its investments can produce scale and returns, while Tata Electronics may require the group to remain patient with a strategically important but cash-intensive business.

The successor will also have to navigate the Air India turnaround, the Tata Sons-Tata Trusts relationship, the Shapoorji Pallonji stake overhang and the RBI's listing requirement.

But the more immediate question on Chandrasekaran's legacy bets will be whether Tata continues to spread capital across ambitious new ventures or adopts a more selective approach.