PolicyEconomy
Tata rift 'cannot be spilling out like this in the public', says Sitharaman
The finance minister called the 158-year-old group a critical part of the economy and asked its two camps to settle their dispute among themselves, as she acknowledged louder worries among investors.
Key points
- Nirmala Sitharaman called the Tata Group a very critical component to the Indian economy.
- She said the dispute between Tata Sons and Tata Trusts has to be amicably settled and should not play out in public.
- On foreign outflows she said India needs capital and equity, particularly now, but gave no word on tax cuts.
Finance Minister Nirmala Sitharaman has told the two sides in the Tata leadership battle to sort out their differences privately, calling the group a critical part of the economy: “a very critical component to the Indian economy”.
Speaking at the Financial Express Leadership Awards in Mumbai on Monday evening, she said the quarrel between Tata Sons and its largest shareholder, Tata Trusts, had gone on in the open for too long. “It has to be amicably settled among themselves. It cannot be spilling out like this in the public,” she said, adding that the government would like to see it settled sooner.
She called the matter sensitive and would not say whether the government would try to bring the two camps together. She also acknowledged the role of the Parsi community in making Tata a global brand.
A rift that went public in September
The split between Tata Sons, led by chairman N Chandrasekaran, and Tata Trusts, led by Noel Tata, came into the open at a Tata Sons board meeting on 17 September. That meeting came within a week of a Reserve Bank of India letter rejecting Tata Sons’ request to de-register as a core investment company. The board decided to pursue a listing, as the central bank required, and reappointed Chandrasekaran as chairman.
Noel Tata cast the only dissenting vote. Venu Srinivasan, the trusts’ second nominee director, broke ranks and voted with the majority. Last week Noel Tata challenged the board resolution reappointing Chandrasekaran.
The row has also turned political. On 28 October Congress leader Rahul Gandhi wrote that “Tata is being criminally destroyed, and no business leader dares say a word.” Sitharaman replied the same day, telling him to “refrain from seeing ghosts everywhere” and calling it “unacceptable” to describe commercial and legal matters as criminal.
‘We need capital and equity’
Sitharaman used the same evening to speak to investors, who have pulled money out of Indian markets. She said she had heard the “louder” voices of concern and recognised the anxiety among retail investors and market participants.
“We need capital and equity, particularly now,” she said. She declined to promise tax cuts, which market players have sought. She said the tax structure was much the same in 2023-24, when India drew its highest foreign investment inflows, but that circumstances had changed. Inflows had started to come back, she said, and the government would consider the concerns raised.
She held to her growth forecast, speaking of “sustained seven-plus growth” for the economy.