Political timing under scrutiny as Tata Group backs BJP after semiconductor approvals

Weeks after the Union Cabinet approved two of its semiconductor units, Tata Group emerged as the Bharatiya Janata Party’s (BJP) largest donor for the 2023-24 period, sparking debate over corporate influence and political funding in India.

The News Minute reported that on 29 February 2024, the Modi Cabinet cleared a fabrication plant in Dholera, Gujarat, by Tata Electronics Private Limited (TEPL) in partnership with Taiwan’s Powerchip, and an Assembly, Testing, Marking, and Packaging (ATMP) facility in Morigaon, Assam, by Tata Semiconductor Assembly and Test Pvt Ltd (TSAT).

Both projects received substantial government subsidies covering half the project costs, totalling Rs 44,203 crore under the Rs 76,000 crore Semicon India Programme. Significantly, both units are located in BJP-ruled states and are intended to boost domestic chip production for sectors such as automotive and telecommunications.

Just weeks after these approvals, in April 2024, Tata Group donated Rs 758 crore to the BJP via an electoral trust, the single largest contribution to the party for that period, according to Election Commission disclosures. The donation came amid heightened scrutiny of political funding, as the timing followed closely on the heels of the Cabinet nod for Tata’s semiconductor projects. Critics have questioned whether the sequence of approvals and donations signals an indirect quid pro quo, though no formal probe has established any illegality.

Historically, Tata has donated to the BJP through electoral trusts. In 2018-19, the Progressive Electoral Trust contributed Rs 356 crore to the party, representing 75 per cent of BJP’s corporate funding that year. The April 2024 contribution dwarfs previous records, making Tata the party’s largest corporate donor ahead of the Lok Sabha elections, an article published by Scroll.in said.

Electoral trusts, introduced in 2013, allow companies to channel donations anonymously to political parties. This differs from the now-defunct electoral bonds scheme, which ran from 2018 to 2024 and raised Rs 16,500 crore overall.

Unlike bonds, which were widely reported and analysed, contributions via trusts often remain opaque, making scrutiny difficult.

The timing of Tata’s Rs 758 crore donation, following Rs 44,203 crore in government subsidies for its semiconductor units, has attracted widespread media attention.

Reports from Scroll.in, amplified across social media platforms including Reddit, Instagram, and YouTube, have sparked debates about corporate influence, crony capitalism, and transparency in political funding. Other parties, such as Congress, received comparatively smaller donations from Tata during the same period.

This phenomenon is not unique to Tata. Murugappa Group, for instance, contributed Rs 125 crore to the BJP shortly after government approval for its semiconductor unit, a sharp increase from prior donations totalling just Rs 21 crore over the past decade. Analysts note a broader pattern where companies increase political contributions following government incentives, leveraging electoral trusts to channel funds discreetly.

While no formal investigation has confirmed any wrongdoing, the proximity of approvals and donations highlights ongoing concerns over transparency in India’s political economy. Studies indicate that sectors such as semiconductors see a correlation between corporate donations and government approvals, raising questions about the influence of private funding on policymaking.

As India heads into elections, Tata Group’s record donation, constituting 83 per cent of its 2023-24 corporate contributions, underscores the intersection of corporate strategy, political influence, and government incentives in shaping the country’s industrial and political landscape.