India is the world's largest democracy, but its stability could be threatened if businesses aren't socially responsible. So cautioned industrialist Ratan Tata at the start of his Hatfield lecture April 10 to a packed audience in Kennedy Hall's Call Auditorium at Cornell.

"We need to operate with principles and values," said Tata, B.Arch. '62, who is chairman of Tata Sons, the principal holding company of the Tata Group, India's largest, most successful conglomerate. He spoke as the 2006 Robert S. Hatfield Fellow in Economic Education. The Hatfield fellowship is Cornell's highest honor for business leaders.

"In the last few years, other countries have started to look at India with a great deal of interest, particularly in the IT [information technology] industry, in software," Tata observed. As a result India's economy is growing at a rate of 7 to 8 percent a year.

"India's growth isn't a bubble, it's sustainable," he asserted. The country has "tremendous human capital." Of India's billion-plus people, 20 percent are now younger than 20. By 2040 the country will have the world's largest working-age population, surpassing even China's, he noted.

"These young Indians want a place in the sun, an education, a job, the kind of life they know exists from television," Tata said. "Will there be jobs for them?" If not, the country may see "the makings of a revolution."

One preventive: businesses that are socially as well as fiscally responsible. "You cannot create great wealth without making an effort to spread that wealth, when you have such a large population of disadvantaged people" as India does, said Tata.

However, "when friends and I have talked about social responsibility, we've been told that we're depriving our shareholders of something that belongs to them." While that may be true in the short term, he said, the good will gained by bringing mobile medical units to rural communities in India and offering job training in South Africa has paid off for the Tata Group long term.

"We haven't had labor strife in 40 to 50 years," he said, and new Tata enterprises are welcomed because of the group's reputation as a community builder. "I go home at night thinking, 'We've done the right thing,'" said Tata.

He wants others to share that approach. "In addition to creating value for their shareholders, industry has a responsibility to the 60 percent of [India's] population that is not industrialized and is living in rural areas," he said. Industry leaders, he added, must work together to create small enterprises in rural areas to provide job opportunities and livelihoods.

Tata also called on business leaders in India to overcome their fears of foreign competition, "break with tradition" and abandon such protectionist policies as the licensing of businesses, which has kept foreign investors out, limited economic growth and encouraged corruption.

"There is the fear that if retail is opened up to the world, the Wal-Marts and Costcos will overrun us, and the Indian retail industry will die. But it's not true," he asserted. Under his leadership Tata Motors launched India's first car; it prospered by competing effectively against the world's best automakers, he said. "Competition is the most exhilarating force you can have. If you succeed, you know you have succeeded against your competitor in a fair and just manner."