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Rahul Gandhi, India's Corporate Elite And The Enduring Power Of Family Dynasties

In the private sector as in politics, a small group of influential dynasties still rule the country. Being on the outside, makes a play on power virtually impossible.

Rahul and Sonia Gandhi pay tribute to Indira Gandhi
Rahul and Sonia Gandhi pay tribute to Indira Gandhi
Patrick de Jacquelot

NEW DELHI – In January, when Rahul Gandhi finally accepted the post of vice president of the Congress party – the country’s dominant political party since its independence in 1947 – thousands of elected representatives and millions of supporters were relieved. The future of both the party and the country was now ensured.

It happened the usual way for Congress: the heir of the Gandhi family was appointed. Never mind that for a very long time Rahul balked at the responsibility to become the party’s number two, alongside his mother Sonia, the party’s president. His father, Rajiv, served as Prime Minister of India, and so did his grandmother, Indira – they were both assassinated.

Nevermind, as well, that his initiatives to reorganize the Youth Congress or his campaign in the 2012 Assembly elections were both highly ineffective.

The only thing that matters is that the party that gave independent India its first prime minister – Jawaharial Nehru – is about to be ruled by the fourth generation of the Nehru-Gandhi family.

The rise of Rahul, 42, is anything but a surprise for a party that could not imagine being ruled by someone outside the family. And it didn’t come as a surprise to the rest of India, where it is common for political parties to be considered as the “private property” of a ruling family. In many Indian states, the big parties that dominate local political life are fiefdoms, which are literally handed down from father to son.

Is this unusual in a country that prides itself on democratic values? Not at all. “Indians are very attached to family values, so they are not surprised that a family would rule a party, it does not shock them,” explains Balveer Arora, a political scientist and former president of New Delh's Nehru University.

From show biz to business biz

If there is one thing you can count on in India, it’s the omnipresence of the family, whether it is in social life or the spheres of power – political and otherwise.

Take cinema for instance, which plays a huge part in the lives of Indians, entranced by Bollywood. A small group of all-powerful clans have long dominated the movie industry, for example, the family of Amitabh Bachchan. The famed actor is a real “godfather” of the big screen; his wife is the famous actress Jaya Bachchan; his son Abhishek is a star too and his daughter-in-law is Aishwarya Rai, also hugely famous.

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The same paradigm also applies to the business world, which is ruled by family-owned groups. Aside from a handful of private banks, every big company in India is family-owned. Of course this also happens in the rest of the world – many Fortune 500 companies are owned by families – but not to the extent it exists in India.

Indians continue to live with their family, for their family, in their family. The “extended family” is the basic living unit in India – parents, children and grandchildren all live under the same roof, whether it is 12 people sharing a tiny two-room shack in a slum or generations dividing up the floors of the luxurious villas of New Delhi.

Extended families provide essential services in a country where social services are almost nonexistent, taking care of the sick, the elderly and the unemployed. The marriages, which are most often “arranged” by the parents, are more often the union of two families than the union of two souls.

This allows the families “to control the reproduction of the group as well as the transmission of capital,” explains Roland Lardinois, a French sociologist working in Delhi. He says the attachment of Indians to their family is sometimes very complicated and difficult to comprehend. “It’s a mystery to me,” says the researcher, who believes there might be a link with the Indian caste system. This system, he says, which is “still omnipresent, is the glue holding Indian society together.”

Indian families are often a tight group, turned inward. But family solidarity does not always work out. After the death of the father of the Ambani family, the Reliance conglomerate was the scene of years of infighting between the two sons – Mukesh and Anil. The company ended up being divided into two. But fratricidal feuding remains an exception in India.

Signs of change

The omnipresence of the family weighs heavily on the Indian conglomerates, where it is not unusual for an entire board to have the same last name. In February, hospital heavy-weight Apollo created a “family board.” Sitting on the board are Prathap Reddy, 80, founder of the medical empire, his four daughters, who all occupy important positions, as well as two advisors. The goal of this new structure is to help integrate Reddy’s ten grandchildren, who will all join the group of the next few years.

The children of a business family do not need to worry too much about their future, all they have to do is to join the family’s company – whether they like it or not. In the families of small retail businesses and companies, the pressure can be extremely high.

Reen Nath, a psychologist from Delhi, works with middle-class children: “Children aren’t given a choice. They have to be with their father, to help him run the family business. They live with their father, they are with him all the time, totally dependent on him.” If you consider the fact that children will marry the spouse their parents have picked out for them, who will come and live with them, the children will never have to take a single decision regarding their own life. This ensures Indian psychologists are never out of work.

For a foreigner, doing business with an Indian family company can quite disconcerting: “I know a company in Gujarat where the head of the family is a very old man, who is missing an arm and part of his brain, because of a tumor. The company is managed by his ‘little brother,’ who is 70, but no decision is taken without him being consulted. Every time there is a board meeting, they visit him first,” says Delphine Gieux, a lawyer with UGGC&Associates, a consulting firm that helps French companies who want to do business in India. “For my French client who created a joint-venture with this company, it was essential that he play along.”

When a foreign firm chooses an Indian partner, they must understand that they are not only entering a partnership with an Indian company, but with the whole family. Understanding which family member will succeed to what post can be key. Gieux says she knows of small and medium-sized French companies who invited the sons of Indian families to do long internships in their company in France, to teach them about the latest technologies and to forge long-lasting personal relationships.

But doing business with an Indian family can also be problematic. “There is no legislation for the misappropriation of company assets,” says Gieux. “When you are buying a company or entering into a joint-venture, you must know their cars, servants, daughter’s wedding… – everything is paid for by the company.” This issue can be quite sensitive during negotiations. The other common problem is that family companies have a tendency to dismiss valuable collaborators whose only handicap is that they don’t have the right name.

The situation, however, is starting to evolve in some sectors – particularly the big technology companies that have clients overseas. In companies like Infosys or Wipro, children weren’t appointed to succeed their parents.

But that does not mean that the big Indian empires are a thing of the past. On the contrary. A recent survey showed that 37% of members the India parliament between the ages of 41 and 50 held “hereditary” seats, meaning they had inherited their own fathers' seats. The ratio goes up to 65% for MPs between the ages of 31 and 40, and to 100% for those under the age of 30. If this trend goes on, then India will be ruled by a hereditary monarch and an assortment of princes – as it was before its independence from the British empire.

Yet, change may arrive where you least expect it – Rahul Gandhi, the indecisive heir, created controversy when he announced early March that he would not get married. He said that if he had children, he would spend all his time worrying about their succession. Pretty noble coming from the prince of a ruling dynasty. But hey, if Rahul doesn’t believe in inherited positions, why didn’t he refuse the offer to join the Congress party?

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