India’s finance minister said Tuesday that corporate governance was important for building resilience in the economy, adding that businesses need trust among each other and should resolve disagreements before turning to litigation.
At a speech to the All India Management Association in New Delhi, Finance Minister Nirmala Sitharaman highlighted various factors needed for good governance, including how businesses conduct themselves and the need to improve management capacity.
“Trust between businesses cannot be demanded; it has to be built through conduct on both sides,” she said. “Businesses must engage constructively with government and regulators. Legal recourse will always remain available, but every disagreement need not begin as a litigation.”
Sitharaman also highlighted the institutional challenges of family-run businesses, a large share of which are medium-sized firms. These companies need professionalization, she said, such as “separating ownership from management, defining responsibilities, preparing the next generation, and resolving conflicts before they affect the business itself.”
The Finance Ministry later clarified to reporters that Sitharaman’s comments weren’t related to the boardroom battle that’s engulfed Tata Group in recent weeks. Tensions between Tata Trusts Chairman Noel Tata and Tata Sons Pvt. Chairman Natarajan Chandrasekaran have escalated over the leadership and the future of the conglomerate’s holding company. Both sides are now preparing for a potential legal battle, Bloomberg News earlier reported.
Referring to the institutional weaknesses of mid-sized family businesses, Sitharaman said the firms need to pay greater attention to succession planning, conflict management, delegation and governance.
“The contribution of Indian management will be measured by the quality of enterprises and institutions we build today,” she said.
–With assistance from Shruti Srivastava.
This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.
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