N Chandrasekaran’s decision to step down as Tata Sons chairman has exposed a new division within the company’s board, with directors split over the next course of action. While some are considering whether he should be convinced to reconsider, others believe the group should respect his decision and begin searching for his successor, The Economic Times reported.
What initially seemed like a routine leadership transition has turned into a more complicated process. Some Tata Sons directors have discussed asking Chandrasekaran to reconsider, while others feel the board should accept his decision and immediately begin succession planning.
Meanwhile, Tata Trusts has begun preparations to form a selection committee for his successor. However, that process has encountered an obstacle as the Sir Ratan Tata Trust (SRTT) is currently barred from holding meetings.
Noel Tata, chairman of Tata Trusts, is also expected to take a prominent role in talks with the Reserve Bank of India regarding Tata Sons’ regulatory classification and its bid to remain an unlisted entity.
Here is how the Tata Sons leadership issue has developed since Chandrasekaran announced his decision.
Chandrasekaran informed the Tata Sons board on August 12 that he would not seek reappointment when his current term expires on February 20, 2027.
His announcement followed months of uncertainty surrounding a possible third five-year term.
The Tata Sons board had previously postponed a proposal to extend his tenure after it failed to secure unanimous backing. Chandrasekaran later indicated that he would not pursue another term, pointing to the absence of unanimous support.
His decision brought his nearly 10-year leadership of Tata Sons closer to an end, while simultaneously bringing internal differences within the group into greater focus.
Reports have highlighted disagreements between Chandrasekaran and Noel Tata over strategy, governance, the expansion of new businesses and certain appointments. Issues involving losses at Air India and Tata’s digital ventures, along with the group’s semiconductor plans, have also been linked to the reported differences.
According to a Times of India report, the differences were significant enough for Chandrasekaran and Noel Tata to separately brief senior government officials before the chairman made his announcement.
DEBATE OVER CHANDRASEKARAN STAYING
The next phase did not immediately focus on identifying a successor.
Instead, discussions began within Tata Sons over whether Chandrasekaran’s decision should simply be accepted.
According to ET, some directors have considered whether the matter should be put to a board vote, while others believe Chandrasekaran should be requested to reconsider.
The Tata Sons board consists of six directors, including the chairman and two nominees representing the Trusts.
Holding a vote on Chandrasekaran’s decision would be unusual because he has voluntarily chosen not to seek another term. One director cited by ET said the board could attempt to persuade him to reconsider, but argued that such an individual decision could not itself be subjected to a vote.
The development has therefore turned the issue into more than a standard succession exercise, with the board itself debating how it should respond to its outgoing chairman.
There has also been speculation that Chandrasekaran was summoned to Delhi by a senior cabinet minister and asked to reconsider his decision.
TATA TRUSTS BEGINS THE SUCCESSION PROCESS
While some Tata Sons directors are discussing whether Chandrasekaran could remain, the Sir Dorabji Tata Trust (SDTT) has taken a different position.
SDTT has asked the Tata Sons board to acknowledge Chandrasekaran’s decision and begin the process of forming a selection committee to identify his replacement.
Tata Trusts later said its trustees had decided to initiate the process of establishing a selection committee at the earliest opportunity, in accordance with the Tata Sons Articles of Association.
The position from SDTT is therefore straightforward: since Chandrasekaran has chosen not to seek another term, preparations should begin for the appointment of the next chairman.
However, there is an obstacle.
SUCCESSION PROCESS FACES AN EARLY ROADBLOCK
A single Trust cannot independently establish the selection committee.
The Tata Sons Articles of Association call for a five-member selection committee. Under Article 118, three members are jointly nominated by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust, another member is nominated from the Tata Sons board, and the board selects an independent external member.
This gives the two major Tata Trusts an important role in choosing the next Tata Sons chairman. Together, the Tata Trusts own roughly 66% of Tata Sons.
The difficulty is that the SRTT is currently prohibited from convening meetings following an order from the Maharashtra Charity Commissioner.
Tata Trusts has said the order was passed ex parte, without giving SRTT prior notice or an opportunity to be heard, and believes the restriction applies only to SRTT.
Nevertheless, the restriction could have major consequences. If SRTT is unable to meet, it cannot jointly nominate members with SDTT for the selection committee. Without those nominations, the committee cannot be formed.
As a result, the succession process could encounter legal and procedural delays, even though Chandrasekaran’s current tenure continues until February 2027.
WHO COULD SUCCEED CHANDRASEKARAN?
No official shortlist has been prepared so far.
However, Moneycontrol has reported that Tata Trusts could favour an internal candidate familiar with the vast Tata group and its distinctive governance framework.
Potential names include Tata Steel CEO and managing director TV Narendran and Tata Power CEO and managing director Praveer Sinha, among others.
These are only individuals who, according to sources, could be considered. There is currently no formal shortlist or decision regarding the next chairman. The eventual selection committee may evaluate both internal and external candidates.
An internal appointment would not be unprecedented. Chandrasekaran himself was chosen from within the group when he became Tata Sons chairman in 2017 after spending nearly three decades at TCS.
NOEL TATA MAY HAVE A KEY ROLE
According to people cited by Moneycontrol, Noel Tata is likely to be part of the selection committee and could potentially chair it.
Tata Sons board member Harish Manwani, who heads the company’s nominations and remuneration committee, could represent the board on the panel.
If the issue surrounding SRTT is resolved and the five-member committee is established, people familiar with the discussions expect the actual search to progress relatively quickly.
Moneycontrol reported that the committee could identify an appropriate successor within roughly one and a half to two months of being formed, potentially allowing the overall process to conclude by the end of 2026.
That would provide several months for a smooth transition before Chandrasekaran’s term expires in February 2027.
For now, however, the first challenge is making the succession mechanism operational.
THE TATA SONS IPO ISSUE
The leadership transition is taking place alongside another long-standing question surrounding Tata Sons: whether the holding company will eventually be required to list.
Noel Tata is also expected to assume a more prominent role on this issue.
Moneycontrol reported on Tuesday that Noel Tata is scheduled to meet RBI officials before the end of August, with discussions expected to focus on Tata Sons’ efforts to remain unlisted.
Until now, Tata Sons executives, including some board members, have been engaging with the RBI over the listing issue. Noel Tata is now expected to lead those discussions.
The matter goes back to 2022, when the RBI classified Tata Sons as an upper-layer NBFC and directed it to list within three years. That deadline ended in September 2025.
Since then, Tata Sons has repaid all of its external debt, largely borrowed from banks, and assured the RBI that it would not raise new debt for onward lending to group companies. It has also stated that it would not issue fee-based guarantees for group-company borrowing.
In December 2024, Tata Sons submitted a written undertaking to the RBI stating that it would not undertake activities resembling financial services and requested deregistration as an NBFC-CIC.
The application is still pending.
According to Moneycontrol, if the RBI accepts Tata Sons’ request to be deregistered as an NBFC, the listing obligation would also disappear.
Noel Tata is expected to seek greater clarity from the RBI on the listing issue as Tata Sons prepares for its leadership change.
The matter is also significant for the Shapoorji Pallonji Group, which owns around 18% of Tata Sons and has been seeking ways to generate liquidity from its holding, including through a possible IPO or buyback. According to the report, the group’s debt stood at around Rs 60,000 crore as of March 31, 2026.
This potentially puts Noel Tata at the heart of two major Tata Sons decisions: determining Chandrasekaran’s successor and deciding whether Tata Sons will remain unlisted.
THE LARGER CHALLENGE FOR TATA SONS
Chandrasekaran’s August 12 announcement has triggered a chain of developments that highlights the complexity of the leadership transition.
The process began with his decision not to pursue a third term after failing to receive unanimous backing. This was followed by discussions within the Tata Sons board about whether he should be persuaded to remain. SDTT then moved to initiate succession preparations, only for the process to encounter the SRTT restriction that could prevent the selection committee from being established.
At the same time, potential internal candidates are being discussed despite the absence of a formal shortlist. Noel Tata is expected to play an important role in selecting the next chairman and is also preparing to discuss the Tata Sons listing issue with the RBI.
The immediate challenge, therefore, is not merely identifying Chandrasekaran’s replacement.
Tata Sons must first make its succession framework functional while its board, the two principal Tata Trust shareholders and Noel Tata work through some of the group’s most significant unresolved issues.
