Tata's $120 billion spending plan faces reset after chairman's exit

N Chandrasekaran's decision to step down as Tata Sons chairman in February puts India's largest conglomerate's $120 billion five-year investment program at risk, as a more cautious trustee board pushes for capital discipline and faster payback horizons.

"Replacing a technocrat of Chandrasekaran's caliber, someone sharply attuned to rapidly shifting technological landscapes, will be a formidable challenge," said Kranthi Bathini, an equity strategist at WealthMills Securities.

Tata Group stocks traded mixed for a third straight session on Friday, with Tata Motors gaining nearly 2 percent while Tata Motors Passenger Vehicles fell as much as 6 percent after reporting an 80 percent drop in first-quarter profit to ₹859 crore from ₹4,003 crore a year earlier. Revenue rose 9 percent to ₹95,799 crore.

The leadership vacuum threatens to slow or scale back the conglomerate's bets on semiconductor fabrication, electric vehicle batteries, and Air India's turnaround — projects central to Prime Minister Narendra Modi's agenda to recast India as a global manufacturing power.

Noel Tata, chairman of Tata Trusts — the collective of 13 charities holding a two-thirds stake in Tata Sons — now manages the transition. His tightening grip over the conglomerate stems from a rift with Chandra, as Chandrasekaran is widely known, over the pace and duration of capital allocation. Unlike his half-brother Ratan Tata, who acquired Jaguar Land Rover and Corus in the UK and favored transformational nation-building projects, Noel oversaw the disciplined expansion of fast-fashion giant Trent Ltd. for more than a decade. That profit focus now informs decisions across the group.

The board has already begun pushing for strategic recalibration. Led by Noel, directors have pressed senior management to reassess or slow down the most capital-intensive projects, most notably the flagship chip fab, the airline, and a budding consumer technology business. "The board wants proof of payoff before it approves more spending," one person familiar with the matter said.

Semiconductor Ambitions Face Reality Check

No project carries more weight than Tata Sons' chip fab in Dholera, an attempt to build a local Taiwan Semiconductor Manufacturing Co.-like giant. The project carries unusual oversight — the fab team is accountable not only to Tata's leadership but also to the Indian government. While Tata Electronics' Assam chip packaging plant remains on track to open next year, operational and technology-access delays have forced the group to start with less sophisticated technology.

A retrenchment is also underway at battery unit Agratas. Facing a widening cost gap with Chinese manufacturers and unable to secure the technology partnerships it had explored, the business has abandoned plans to race toward commercial-scale production of battery cells. The emphasis is on proving the technology before committing billions more to scale.

Turning around Air India is another mammoth task after the carrier was battered by record losses in the year to March 31, following a plane crash in June 2025 and geopolitical conflicts that lengthened flight routes. The group has already downsized its ambitions for the airline acquired four years ago in one of India's biggest privatizations.

At Tata Digital, the consumer technology business, directors pushed back on a request for roughly $1 billion of additional funding. The board demanded a more detailed road map for narrowing losses and improving execution. The response has triggered a broad restructuring, with management layers slimmed and new leadership brought in across key businesses.

TCS Enters Uncertain Phase

Tata Consultancy Services, the conglomerate's financial ballast, is entering a more uncertain phase. India's largest software exporter continues to bring in billions in cash each year, but a slowdown in enterprise technology spending and the shift toward AI has eroded its position of strength. In a preemptive move, TCS's board has installed a new layer of senior executives over the past 18 months under CEO K. Krithivasan, including a chief operating officer, chief strategy officer, and head of acquisitions. TCS is also aggressively exploring acquisitions and AI infrastructure investments after historically relying almost exclusively on organic growth.

Succession Process Begins

Attention now shifts to who Noel will appoint as Chandra's successor. Tata Trusts took formal steps Thursday to identify a successor, with a five-member committee handling the final selection. TV Narendran, the 61-year-old CEO of Tata Steel, is among the prominent names in consideration, given his three decades within the group and his professional relationship with Noel.

Succession has always been tricky at the group. Founded in 1868 by Jamsetji Tata, the conglomerate was led by Tatas until Ratan Tata handed the mantle to Cyrus Mistry in 2012. Just four years later, Ratan led a boardroom coup to oust his successor. Chandra emerged as the right candidate at the time — a career technocrat who spent 30 years at TCS, eight as CEO, and had transformed the software giant into India's most valuable enterprise.

Chandra framed his vision for Tata in unusually long-term objectives, calling his conceptual framework "cathedral thinking" — a term borrowed from Australian philosopher Roman Krznaric, evoking medieval builders laying foundations for structures they would never see finished. His successor will likely not have the same space to dream.

"Whoever takes over as chairman will face a tougher environment," said Deven Choksey, managing director at investment advisory firm DRChoksey FinServ. "An increasingly assertive trustee board will make it more difficult for the next leader to operate with the same degree of autonomy."

Jefferies, in a note on the group, said it believes "business fundamentals will prevail" despite near-term market concerns about leadership change. The brokerage's top picks among Tata Group companies are IHCL, Tata Consumer, Tata Steel, and Voltas, while it holds underperform ratings on TCS, Tata Motors Passenger Vehicles, and Tata Power.

This article is for informational purposes only and does not constitute investment advice.