The story of the Tatas is also the story of Indian capitalism—carefully air-brushed for greater glory. Ratan Tata’s passing is as good an excuse as any to revisit the less known roots of the house of Tatas—which lie in the Opium Wars of the nineteenth century—and the British imperial wars in Abyssinia.
Editor’s note: The life and times of Ratan Tata were well-covered in the media over the past week. We’ve added some of the good ones in the reading list.
Tata, the opium trader
Today, the Tata group is known as a "salt-to-software" conglomerate of more than 100 companies—with annual revenues upward of $100 billion. The Ambanis and Adanis may be wealthier, but none are remotely as revered. But Tatas too were carpetbaggers of the most unsavoury kind—once upon a time—when opium was the lifeblood of the British empire.
First, came the Dutch: The story begins in the eighteenth century—when the Dutch East India Company established itself in Surat—in partnership with the Parsis. The Dutch were the first to export India-grown opium to China and the islands of Southeast Asia. They even introduced the practice of smoking opium in a tobacco pipe to the Chinese—even as the emperor, Yung Cheng banned opium consumption. Their partners-in-trade were the Parsis—such as Hirji Jivanji Readymoney who arrived in Canton in 1756.
Enter, the East India Company: In the late eighteenth century, the English developed a great fondness for Chinese tea. Unfortunately, the Chinese did not reciprocate a similar desire for anything English. The result was a terrible trade imbalance—which resulted in vast amounts of silver in Chinese coffers. The East India Company—which controlled great parts of the subcontinent—decided to elbow out the Dutch:
The solution was opium, Indian opium. The Company Sarkar had a monopoly on the import of tea into Britain. It also enforced a monopoly on the supply of opium in India. The Company purchased the crop from poppy growers in Bihar and Benares, processed it in its factories, and auctioned it in Calcutta for export to Canton, modern Guangzhou.
The British empire was fueled in great part by state-sanctioned drug trafficking—out of India.
Meet Nusserwanji Tata: According to the official Tata history, Nusserwanji hailed from a family of Parsee priests. An “enterprising” chap who was the “first Tata to try his hand at business.” What’s left unmentioned is his actual ‘business’—opium.
By the mid-nineteenth century, the Company Sarkar had gained monopoly over Indian opium—except for a key poppy-growing region in Malwa. It offered opportunity for Parsi traders like Nusserwanji—more so after the first Opium War (1839–42). The East India Company forcibly gained control of Chinese ports—shovelling opium down Chinese throats. (Lots more here on how the Brits used opium to destroy China).
Point to note: Opium was India’s largest export for much of the 1800s—and the “backbone of the British imperial economy.”
A side note: One of the most revered Parsis in Bombay—Jamsetjee Jejeebhoy—was also one of the wealthiest opium traders—rewarded by Queen Victoria with a baronetcy. But he also did a lot of good with that ill-gotten wealth—as did the robber barons of America. Btw, Canton is also where Parsis later developed a taste for fine English goods—living in digs provided by the Company.
About those Parsis: While they may have dominated the opium trade, they were hardly alone in doing so. Jejeebhoy’s partners were the Gujarati Jain Motichund Amichund, the Konkani Muslim Mohammed Ali Rogay and, later, the Goan Catholic Roger de Faria. And as Dibyendu Ganguly points out:
The Parsis succeeded because they operated from Bombay, where the East India Company had less control. In Calcutta, where it was omnipresent, Indian businessmen like Dwarkanath Tagore made investments in opium, but failed.
FYI: Dwarkanath was the grandfather of Rabindranath Tagore.
Tata, the war profiteer
The Tatas were hardly the biggest players in the opium trade—and nearly lost their fortune to an unstable market. The real secret of their fortune—that laid the foundation for generational wealth—was Nusserwanji’s other hustle: provisioning British wars:
Nusserwanji’s fortunes were made by his work as a contractor during the Anglo-Persian War of 1856-57, when British troops and ships raised by the government of India occupied the Persian port of Bushehr at great expense. James Outram, who lends his name to many neighbourhoods in India, led the British forces.
Outram later returned to India to brutally put down what was then called the Great Indian Mutiny. Nusserwanji would offer his services as a vendor once again—winning a contract to supply General Robert Napier’s expeditionary forces in Abyssinia. As historian Mircea Raianu notes:
[T]he real scandal at the root of the Tata fortune . . . was insider trading and corruption in a nineteenth-century version of the military-industrial complex, revealing the nexus of Indian capital and imperial power.
The somewhat amusing bit: Napier was robbed silly by price-gouging Parsi traders—including Nusserwanji.
Cleaning the Tata stables: Jamsetji joined his father Nusserwanji’s business in 1858—and quickly pivoted toward cotton—which turned out to be a genius move:
Earlier, [opium] profits would be repatriated through bills of exchange issued by the East India Company, which served as currency, but the system broke down. “The move into manufacturing wasn’t a natural progression for the Parsis of Bombay. Rather, it was a solution to the problem of not being able to repatriate profits from the China trade,” says [historian Amar] Farooqui. The move into cotton textiles proved to be very fortuitous for Bombay’s former opium merchants. The American Civil War of the 1860s saw demand for cotton zoom and those in the business made fortunes.
At the turn of the 20th century, Jamsetji expanded even further to steel, hydroelectricity—and the Taj Mahal hotel. Thereby kicking over any traces of his father’s less than glorious past.
Tata, the [selective] philanthropist
The Tatas have been exceedingly generous with their wealth—conspicuously so by Indian standards. According to author Peter Casey, it is rooted in a dynastic ethos:
Casey describes ‘the Tata Way’ as a ‘practical alternative to Marxism’, quoting Ratan Tata, its chairman until 2012: ‘Marx’s vision was to take from the rich to feed the poor. Jamsetji’s vision was to make the poor rich.’
That message is not just some company mission statement. It lies at the very heart of Tata mythology:
The Tata adverts I grew up watching seemed to be doing something more ambitious than selling clothes or groceries: they represented values to live by, a guide in how to be a good Indian citizen. ‘What is good for India is good for Tata’ it says on the group’s website. The Tatas aim not to profit, but to serve.
But, but, but: The Tata Way has always smacked of noblesse oblige—a sense of social responsibility, yes, but only to whom they consider worthy. That worldview dates all that way back to Jamsetji:
It’s true that the company saw itself as committed to the uplift of the nation and its less fortunate citizens, but the charitable philosophy of Tata was informed by Jamsetji’s ideas of ‘constructive philanthropy’, which was intended to ‘lift the best and most gifted’ members of society out of poverty, rather than prop up the ‘weakest and most helpless’... Constructive philanthropy laid bare that some were more deserving of charity than others.
And nowhere is this more obvious than the town named after him: Jamshedpur.
Jamshedpur, an origin story: Soon after his profitable adventures in cotton, Jamsetji turned his attention to steel. The decision to set up the Tata Iron and Steel Company in 1907 is now presented as the OG atmanirbharta move. But its real job—when it started production in 1911—was to supply the British military during World War I. As reward, the Tatas also received the land—which today is called Jamshedpur in honour of Jamsetji. Their own personal fiefdom:
The land was granted to them under zamindari right, and zamindars were normally required to pay revenue to the government. The Tatas were exempted from that payment. They were also given full municipal control over the city.
A township of dreams? In some tellings, Jamshedpur has been a beacon of responsible capitalism:
All the steel workers there enjoy subsidised housing. They receive free treatment at the local hospital, built and funded by Tata, and their children can go to Tata-run schools. Electricity is subsidised. Water is free - and Jamshedpur is one of very few cities in India where the tap water is drinkable, because it has been purified by Tata. The company even runs a snake hotline in case a snake gets inside workers' houses.
That’s the Jamshedpur reserved for management—and company websites. The ‘other’ Jamshedpur is far less salubrious.
A township of nightmares? As we noted, Tatas were given unprecedented and absolute control over the land and its inhabitants—at the very outset. The resident Adivasis were kicked out in a manner so cavalier—even Gautam Adani would be impressed:
The Land Acquisition Act of 1894 facilitated compulsory dispossession in favour of private companies if they served a ‘public purpose’. Over the years, Tisco was landowner, landlord and municipal authority in Jamshedpur, buying up entire villages, charging rents at a profit, and providing patchy services.
But, hey, the Adivasis were, in fact, given jobs. Though their work environment wasn’t quite as exemplary—because, Adivasis:
Suggestions for improving the working or living conditions of the workers at the plant were often rejected on the grounds that the Adivasi had peculiar habits, temperaments and physiological characteristics. This racist colonial attitude was most apparent in the treatment of Adivasi women, who made up a sixth of the workforce.
The company provided housing for just eight thousand of its fifty thousand workers and many of the women travelled in from villages miles away. They would stay overnight at the plant, bathing in waste-water from the blast furnaces. In the recollection of a timekeeper in Tisco’s brick department… it was commonplace for supervisors to touch women’s bodies without their consent.
Quote to note: When JRD Tata took over after his father Jamsetji’s death, the family’s ‘right-hand man’, advised the heirs to ‘plant your industrial empire with the organising precision of the Roman, not the fever of the Arab’. And so they did… in distant places like Jamshedpur—away from the glare of city lights.
Point to note: This year, a Supreme Court petition challenged the right of an unelected private entity to administer Jamshedpur—which to this day is divided into the ‘good’ and ‘bad’ kind—between management and the janitors who serve them.
The bottomline: The Tatas were generous in their charity—but far from charitable in business:
[I]ts formidable philanthropic record, unmatched by other Indian businesses, made Tata “a byword for integrity and excellence in a corrupt society”. Yet for much of its history was a monopolist acting like a “quasi-sovereign power”. One 1920s trade unionist memorably dubbed it the “blind king” in a “city of darkness”.
But a king who at least recognises the obscenity of great wealth. As Ratan Tata famously said of Antilla: “It makes me wonder why someone would do that ... That’s what revolutions are made of.”
Reading list
Financial Times (splainer gift link) has an excellent overview of the closely entwined histories of India and the Tatas. London Review of Books and Jacobin offer the most scathing takedown of the Tatas history. This Scroll interview with Dilip Simeon offers more on Tata’s fraught relationship with labour. BBC News lays out how the British opium trade impoverished Indians—while Scroll explains how it destroyed China. Economic Times has more on the Parsi opium traders. We did two Big Stories—on Jamshedpur—and Ratan Tata’s ugly feud with his successor Cyrus Mistry.
For more on Ratan Tata and the company’s recent history: Randeep Ramesh in The Guardian and Independent UK offer a glowing tribute to Ratan Tata. BBC News offers a similarly positive view of Tata’s modern history. If you want to hear more from the great man himself, check out NDTV’s ‘Walk the Talk’.
