Chandrasekaran Exit Puts Tata’s Big Bets Under Pressure

Chandrasekaran announced that he would not seek another term after the Tata Sons board failed to reach agreement on his reappointment. Tata Trusts, which controls about 66 per cent of Tata Sons, had raised concerns around the group’s strategy, including Air India, the potential listing of Tata Sons and other unresolved governance matters.

The leadership change comes after a period in which Tata expanded aggressively into businesses that require large amounts of capital and could take years to generate returns. Tata Sons reported standalone profit of ₹31,961 crore in FY26, while several of the group’s newer businesses continued to post large losses.

Air India is one of the biggest tests. The airline reported a net loss of more than ₹22,000 crore in FY26, according to Tata Sons’ annual disclosures reported by The Economic Times. Chandrasekaran had described the turnaround as a five-to-10-year process requiring continued investment in aircraft, technology, training and customer service.

That means the incoming Tata Sons chairman will inherit an aviation business that still requires substantial capital and operational improvements. The leadership transition does not itself change Air India’s existing transformation programme, but it could influence how the group prioritises investment and measures progress.

Semiconductors represent another long-term bet associated closely with Chandrasekaran’s strategy. Tata Electronics is developing a semiconductor fabrication facility in Dholera, Gujarat, with planned investment of up to ₹91,000 crore. The project is being developed with Taiwan’s Powerchip Semiconductor Manufacturing Corporation and is designed to manufacture chips for automotive, computing, communications and artificial intelligence applications.

The Dholera project has continued to attract technology partners. In May, Tata Electronics and ASML signed a memorandum of understanding covering lithography equipment, talent development and research infrastructure for the planned 300mm fab. Tata said the facility is intended to become India’s first commercial 300mm semiconductor fab.

Tata Electronics is also building semiconductor assembly and testing capabilities. The company has described its strategy as spanning electronics manufacturing, semiconductor assembly and testing, foundry operations and design services.

The third major area is electronics manufacturing for Apple. Tata Electronics has expanded its role in the iPhone supply chain, including manufacturing operations in India. The group injected another ₹1,500 crore into Tata Electronics in April to support the expansion of its iPhone manufacturing business, according to The Economic Times.

The electronics business has also faced setbacks. Reuters reported in June that a cyberattack exposed confidential Tata Electronics files, while a separate regulatory dispute involved alleged wastewater contamination near the company’s Hosur facility. These developments add operational and governance challenges as Tata tries to scale its electronics manufacturing footprint.

Chandrasekaran’s departure therefore comes at a sensitive stage rather than at the end of Tata’s expansion cycle. Several of the investments he championed are still being built, scaled or turned around, leaving the next chairman to balance long-term industrial ambitions with capital discipline.

The issue is not that the semiconductor fab, iPhone operations or Air India transformation will automatically stop after Chandrasekaran leaves. Those businesses have their own management teams, partners and approved investment programmes. The bigger question is whether the new leadership maintains the same pace and capital commitment or changes priorities.

Tata Trusts has already started the succession process. The Sir Dorabji Tata Trust has approved the formation of a panel to recommend the next Tata Sons chairman, with the group saying it wants a smooth transition aligned with the long-term interests of Tata Sons and Tata Group.

The leadership change also revives questions about the relationship between Tata Sons and Tata Trusts. Reuters reported that the dispute over Chandrasekaran’s reappointment centred partly on strategic disagreements and the influence of Tata Trusts, which controls the holding company.

For investors, the immediate focus will be the succession process and whether the new chairman can maintain alignment between Tata Sons, Tata Trusts and the operating companies. The longer-term test will be whether Tata’s major new investments can eventually produce the financial returns needed to justify their scale.

Chandrasekaran is expected to remain chairman until February 2027. Until a successor is selected, Tata’s semiconductor, electronics and aviation projects will continue under their existing management structures, leaving the next chairman to decide how aggressively the group should pursue its long-term bets.