The prospect of increasing American involvement in India divided big business every bit as much as the dramatic events of August 1942. An internal memorandum for the Tata Sons statistical department found that due to the difficulty of obtaining machinery from Britain and Europe, the “only country which can fill up the gap in our import trade is U.S.A.” The Tatas were decidedly in a minority in welcoming this prospect. FICCI leader Purshotamdas Thakurdas warned that foreign multinationals would use the war as a pretext to further exclude Indians from their share of the spoils. A. D. Shroff, the young banker who had led the charge against Nehru after the Lucknow speech, joined Tata as a financial adviser in 1940. He condemned Thakurdas’s warning as “a downright Congressman’s utterance” and “a clumsy attempt at the usual double-dealing game at which he always plays.” More than any other single factor, differences on foreign capital undermined the tendency toward unity and concerted political action among Indian businessmen.
The controversy over the American Technical Mission, headed by diplomat Henry F. Grady, brought these differences into sharp relief. The mission arrived in India in the spring of 1942 to make ostensibly nonpolitical expert recommendations on strengthening Indian industry as part of the Allied war effort. President Roosevelt’s representative, Louis Johnson, who was known to be friendly to the nationalist cause, gave his emphatic assurances that the mission was “not here to introduce American capital” and “not concerned with the commercial and economic relationships that may exist between India and the United States.” In response, FICCI issued an official communiqué warning “the Indian public and the commercial community to be vigilant.”
American help was welcome but only in the form of essential plant and equipment under Indian control. Thakurdas refused outright to meet with the mission, but G. D. Birla believed there was “a very important political value” in at least getting to know the Americans. Johnson’s and Grady’s protestations aside, the importance of the mission lay first and foremost in the political domain. Its main advocate in Washington was India’s agent general Girja Shankar Bajpai, whose aim was to draw the United States deeper into Indian affairs in order to accelerate independence negotiations. Birla’s instinct was to go along with this strategy, even if he gained no obvious economic advantage from it. The assumption that Indian businessmen spoke out as a united class against the mission does not bear scrutiny.
The Grady Mission spent five weeks in India, visiting only Bombay, Calcutta, and Jamshedpur. With regard to the steel industry, it recommended the expansion of TISCO plant capacity and the procurement of additional equipment and production engineers from the United States. The Government of India agreed to spend Rs. 143 lakhs on extensions to the Jamshedpur plant, absorbing 50 percent of the total cost and arranging the import of American machinery under the Lend-Lease Act. For this reason, the Tatas could not join their colleagues’ public condemnation of the mission as a Trojan horse for American imperialism. Nor could they give the impression of supporting it too enthusiastically. M. N. Roy had spotted the bind they were in, making the lukewarm response to the Grady Mission a centerpiece of his case. Tata solicitors’ reply to this particular charge was understated, simply noting that the mission “had expressed themselves satisfied” with the steel company’s participation in the war effort. The problem faced by Tata, Birla, Thakurdas, and the various factions they represented was not the desirability of American involvement per se, which could be downplayed in public, but how to position themselves behind the scenes in order to benefit from the seemingly inevitable geopolitical ascent of the United States.
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For its part, the colonial government not only disregarded the Grady report but actively suppressed its findings about the underdeveloped state of Indian industries. The British were clear-eyed about the long-term consequences of the mission: “Once a start has been made along this road there can be no turning back. Industries equipped with American plant and organized by American technicians must in the future turn more and more to the United States for renewals, replacements and future developments.” But officials could take consolation in the fact that “the American team and the Indian personalities they met do not seem to have mixed very well.” They noted with satisfaction that “Grady and Co. and Birla and Walchand and Co. take as low of a view of each other respectively as you and I take of both lots— which is saying something!”
In Washington, Bajpai bitterly complained that Indian businessmen were “reactionary and self-seeking and it was they who had spread the first rumours designed to discredit our technical mission before its arrival in India.” His plans to foster closer Indo-American ties had temporarily stalled. The US military, wary of the political instability caused by the Quit India movement and the prospect of an imminent Japanese invasion in the summer of 1942, refused to sanction the export of a new blast furnace for TISCO. The promised extensions to the Jamshedpur plant never materialized.
The failure of the Grady Mission affected the Tatas more than anyone else. During the course of the war, they had come to be associated more with the expansion of American interests than with the nationalist cause. A widely felt affinity with the United States as a counterweight to the British Empire was evident across their operations. In late 1942, TISCO middle managers still smarting from the defeat of the Quit India strike expressed their discontent by displaying American war propaganda, including copies of the Declaration of Independence and lyrics to the “Star-Spangled Banner,” “under the glass surfaces of their desks.”
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In 1944, a German newspaper made special note of this tendency: “If the U.S.A. show such a lively interest in Tata, this is not solely due to the American capital invested there, but it is particular because of their hope that they can pit the political strength of India against England, with the help of Tata.” The article went on to recall Tata’s long history of using financial connections with the United States to circumvent colonial state policy and secure their industrial base, going back to the early days of TISCO and the power companies. It was with this history in mind that British officials and the Indian public reacted to the landmark Bombay Plan, typically seen as the moment of arrival of the “national bourgeoisie.”
Excerpted from TATA: THE GLOBAL CORPORATION THAT BUILT INDIAN CAPITALISM by Mircea Raianu, published by Harvard University Press. Copyright © 2021 by the President and Fellows of Harvard College. Used by permission. All rights reserved.