For many years the hottest event in Indian capitalism was the annual general meeting of Reliance Industries. Thousands of attendees, from rickshaw drivers to day labourers, would pile into the Cooperage Football Stadium in Mumbai for a glimpse of Dhirubhai Ambani, the company’s charismatic founder.
Reliance’s annual meeting last month was a decidedly duller affair. Gone were the thronging crowds; the event was held online. Reading from scripted remarks was Mukesh Ambani (pictured), who now leads the conglomerate after a bitter feud with his brother following their father’s death in 2002. At 67, Mr Ambani is rumoured to have suffered a serious illness in the past three years (which the company denies). Those who do business with Reliance say that after him, the most important person there is Manoj Modi, a long-time employee who keeps a low profile (and is no relation of the prime minister’s). When Mr Ambani eventually steps away, many expect that control of India’s most valuable company will shift to a hired hand such as Mr Modi, with Mr Ambani’s children accorded ceremonial roles. In India, such transitions are slowly becoming more common.
Big family companies play a strikingly large role in Indian commerce. Its ten most valuable family-business groups are worth nearly $900bn, according to Hurun India, a research firm (see table). The top 100 are worth $1.4trn. First-generation groups account for just a fifth of that. According to a study co-authored by Kavil Ramachandran of the Indian School of Business, nine-tenths of India’s listed firms are family-controlled, far higher than in the West. Few corporate giants in America are controlled by families; there is no Gates at Microsoft, nor a Jobs at Apple. Rupert Murdoch, a media mogul, is under pressure from an activist investor to give up his family’s control of News Corp.
In India the outsize role of families changes the character of commerce. Succession feuds such as the one between Mr Ambani and his brother are common, and often lead to conglomerates being split into multiple businesses. Corporate empires intermingle through marriages. Foreign companies such as Disney, a media giant, have realised that doing business in the country is easier with the help of a well-connected family.
Dominance of India’s economy by a few families is an outcome its post-independence government overtly sought to avoid. Various laws passed between 1947 and 1969 sought to curtail the growth of large companies. Many firms were nationalised and various industries, such as mining and telecoms, were reserved for the state.
In practice, the vast regulatory burden of doing business in the country continued to benefit large family enterprises with strong connections—an advantage that persists today. In a country with weak institutions, these firms are better placed to attract capital, negotiate with workers and sway government policy in their favour. A focus on leaving a legacy may also encourage family-run businesses to invest more in their long-term success. It helps that, unlike many rich countries, India has not imposed an inheritance tax since 1985, making it easier to maintain family control across generations.
There are signs, however, that change is underway, and not just at Reliance. There are very few Tatas left at Tata, another conglomerate. The last member of the family to run it, Ratan Tata, stepped down in 2012 (albeit with a brief cameo in 2016). When Anand Mahindra retired in 2020 as head of the Mahindra Group, yet another Indian conglomerate, he handed the reins to an employee. So did Harsh Mariwala when in 2014 he stepped down as the boss of Marico, a family firm he had grown into a consumer-products giant.
For private-equity firms considering India, such transitions provide an opening. Nikhil Shah of Alvarez & Marsal, a consultancy, notes that helping them turn around former family companies is a growing business for his firm. Family-owned giants including Cipla, a pharmaceutical company owned by the Hamied family since 1935, and Haldiram’s, a snack-food business controlled by the Agarwal family since 1937, are said to be up for sale.
In time, the growing dynamism of India’s economy may further loosen the grip of corporate dynasties. New-business registrations have picked up as the process has become simpler. Despite a recent slump in venture-capital investment, India has a vibrant tech scene full of entrepreneurs eager to disrupt stodgy incumbents.
But change will be slow. Gautam Adani, India’s second-richest man and patriarch of the Adani Group, has been explicit about his desire to create a dynasty. His children are heavily engaged in the business, and people who interact with the group say they routinely encounter family members. JSW, India’s biggest steel company, is now preparing for its second round of succession. Bajaj, one more Indian conglomerate, has been through two rounds of succession already and seems likely to go on to a third. India’s family empires, it seems, will not go anywhere fast. ■
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