Finance Minister Nirmala Sitharaman on Tuesday urged family-owned businesses, including MSMEs, to resolve internal disputes before they affect business expansion, brand reputation and operations.
“A large share of India’s MSMEs and mid-sized enterprises are family-owned. Many have strong products, loyal customers and significant growth potential, but expansion can be held back by unclear roles, succession disputes, informal decision-making and disagreements within the family,” Sitharaman said while addressing the 53rd National Management Convention of the All India Management Association.
She called for greater professionalisation of family-owned enterprises by separating ownership from management, clearly defining responsibilities and preparing the next generation to take over the business.
“The challenge is often not entrepreneurship, but institutionalisation. We need professionalisation — separating ownership from management, defining responsibilities, preparing the next generation, and resolving conflicts before they affect the business itself,” she said.
Sitharaman also urged businesses to engage constructively with the government and regulators and avoid rushing into litigation over disagreements.
“Legal recourse will always remain available, but every disagreement need not begin as litigation,” she said, emphasising the need to resolve challenges with guidance from the government and regulators rather than escalating differences into formal disputes.
The comments came amid the ongoing dispute between Tata Sons and Tata Trusts. However, the Finance Ministry clarified that the minister's remarks were not related to the Tata issue, but addressed the broader institutionalisation challenges facing India's family-owned businesses.
Sitharaman also urged corporate managers to focus on building an ecosystem in which products manufactured in India meet global standards and cater to international markets.