JRD Tata — the democratic capitalist


May 30, 2020

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In today’s context, JRD would have approved of ‘Make in India’, but not the dilution of workers’ rights to attract foreign investors JRD Tata was chairman of Tatas, India’s largest industrial conglomerate for 51 years, from 1938 to 1989. He steered the group through several regimes hostile to Indian industry: British Raj which discouraged making in India; and the Licence Raj, the bureaucratic muddle for ‘making in India’.

JRD said that whenever he had to take a tough business decision, he would ask himself first, what would be good for India; and then, what would be good for Tatas. Invariably what was good for India would turn out to be good for Tatas too, he said.

Article by Arun Maira | The Hindu


JRD Tata joined Tata Sons as an unpaid apprentice, when he was 21 years old — he became chairman when he was 38. He was not schooled in management. Nor could he have domain expertise in all the industries in which the group participated: for it was said that it was easier to list the industries in which Tatas did not participate than those in which it did.

JRD picked leaders who dared to build in India, and who had the passion to learn fast too. Jamsetiji Tata, the Founder of the Tata Group, was a role model. He built a factory in Jamshedpur to make steel in the face of opposition from the British government. JRD Tata backed Sumant Moolgaokar to realise his vision to build an Indian company to design and make commercial vehicles — which were exported to over 50 countries, in competition with European and Japanese companies, even before the Indian economy was liberalised in 1991. He gave Darbari Seth freedom to design and make equipment in India when it could not be imported and expand Tata Chemicals; and he supported Fakir Chand Kohli in his dream of building Tata Consultancy Services; and Xerxes Desai who built the foundations of Titan watches.

Tata was known to be a ‘people’s man’. Every employee in the far-flung Tata empire could write directly to the chairman if he/she felt their managers were not living up to Tata values. Hundreds of postcards would come to his office every month, each of which was responded to. JRD believed that workers are the backbone of industrial enterprises. He personally wrote a manifesto of a human enterprise to guide all Tata companies.

Joint works councils Tata Steel is well known as a pioneer of many far-sighted industrial practices. It set up ‘joint works councils’ in all departments in the 1950s, with equal numbers of workers and managers, to deliberate on policies within their departments, with an apex council, also with equal representation, for the whole factory. Yet, even though he made himself accessible to all workers, and even though workers participated in joint works councils, JRD Tata wanted them to be represented by a good union too.

Tata Steel is proud of its record of over half a century of industrial peace, with not a day of production lost due to a strike or lockout. JRD believed good human relations are not built on paternalist principles. He believed that workers must have the right to speak to their managers as equals when matters of principle or fundamental rights are involved. Because, if they do not have channels to do this peacefully, they may have to resort to strikes to make themselves heard.

Good unions were their insurance if other channels, such as works councils and postcards to the chairman, failed to make their voices heard. Indeed, whenever a postcard was received, Tata would want to know why the institutions had failed, and what was being done to repair them. He was an institution builder par excellence.

When Telco was setting up its new factories in Pune in the 1970s, JRD took great interest in the development of institutions for managing the human side of the enterprise. I was involved with this endeavour and therefore had the opportunity to learn from him.

Telco had the option to shut out unions in its new factory, under the prevalent laws, provided it had other institutions for workers’ participation. Tata Steel’s works councils were accepted as a good blueprint. JRD encouraged Telco to adopt it. However, he also encouraged Telco to, in addition, create conditions for an independent workers’ unions, elected by the workers, to bargain with the management.

JRD Tata was a democratic capitalist. Mahatma Gandhi said that while he was fighting for India’s political freedom, Jamsetji Tata was fighting for India’s economic freedom. After India won its independence from the British, JRD Tata carried both flags. He continued Jamsetji’s mission to build world-class industries to make in India. And he was also a champion of the political rights of India’s workers to form good unions within Tata enterprises.

JRD’s policy

Covid-19 has shattered the lives of millions of Indian workers’ and their families. They are struggling to get away from their places of work, to a home somewhere else where there is no work either, but where they expect more compassion than they had from their employers. India’s shattered economy will have to be built again.

It will need a new architecture to make it more resilient, by creating more employment, in dignified work with more social security. Moreover, much more will have to be ‘made in India’. Because, all countries are turning inwards, to create more jobs for their own citizens, and global supply chains have broken to protect countries from infections from others.

Tata’s test of a good policy was whether or not it would be good for India (and Indians), before considering whether or not it was good for Tatas. India, with its burgeoning population of youth, has the greatest need amongst all countries for job creation. The ‘Make in India’ policy of the government would have passed Tata’s test. The suspension of the rights of Indian workers within India, to attract foreign investors (or to make it easier for Indian capitalists to make profits) would not have.

1 Comment

  1. Dinshaw Dastur

    I couldn’t believe what I read in this article, that Employers are looking today at the foreign investment for their profits at the expense of Indian workers. If that is the case—-then License Raj of Nehru will return to Indian economy to harm local enterprises. BJP must warn such industrialists.