The Chettiars could have rivalled the Marwaris had history played out differently: New book

In his new book Fortune Seekers, economic historian Raman Mahadevan maps the rise of the Chettiars — and why their vast Southeast Asian network didn’t last.

Most Indian business histories focus on the Marwaris and Bania community. But in Fortune Seekers, economic historian Raman Mahadevan turns his attention to the Natukottai Chettiars, a mercantile community from Tamil Nadu whose financial reach once extended across Southeast Asia. By 1929, their assets were estimated at ₹200 crore, an extraordinary figure for a community of just over a lakh people. From financing Burma’s rice economy to backing rubber and tin production in Malaya, the Chettiars built one of the most far-flung capital networks of their time. In this interview with the Hindustan Times, Mahadevan revisits their rise, risk appetite, and eventual decline. Excerpts.

Bankers of the East

The Chettiars were reportedly known as the ‘bankers of the East’. Exactly how powerful were they in their heyday?

They were really big and economically quite influential. Some estimates suggest that the total assets of the Chettiar community, which were valued at around ₹10 crore in the 1880s, had by 1929 grown phenomenally to about ₹200 crore. Keeping in mind that this was a small community — some surveys suggest they numbered just around 1,25,000 in the 1930s — this was a very impressive achievement. Their migration to the Far East picked up in the 1870s, catalysed by the opening of the Suez Canal, which effectively shrank the distance between Asia and global markets. That had a huge impact on the whole process of commercialisation and created business opportunities, which, in a sense, triggered the movement of Chettiar capital to these regions. In Burma, for instance, while Europeans owned the big rice mills, the financing of agricultural production was almost entirely in the hands of the Chettiars. That’s where they made their money. Similarly, the global automobile industry required rubber and tin — both of which came from Malaya — and again, the Chettiars financed the production of these commodities. In Ceylon, they funded the non-European coffee, tea, and coconut plantations. The crisis began with the Great Depression and deepened with the Second World War. Counterfactually, you could argue that had these global shocks not occurred, the economic landscape in India might have been very different. If the Chettiars had managed to bring all that capital back to India, they could well have become what the Marwaris were in Bombay and Calcutta.

How did they differ from the Marwaris and Banias? One major difference was that the Chettiars went abroad in large numbers. The Marwaris did go too, but far fewer. While many Marwaris were bankers, they were also predominantly traders. My theory is that the transition from trade to manufacturing is easier — their access to market and commercial intelligence provided a certain edge to the trading class and gave them a head start in industrial ventures. In western India, Marwaris and Gujarati Banias were able to move into paper, sugar, and textiles. But the Chettiars’ domestic footprint was relatively limited until the 1930s, as much of their capital remained locked overseas.

More importantly, as the return on investment through banking in Southeast Asia was significantly higher than in Indian industry, there was no major inclination on their part to invest in industry. The risk the Chettiars took was also much greater as compared to other business communities. All business communities are risk-takers, of course, but the Chettiars, by moving out of South India to Southeast Asia and by learning new languages, operating in remote foreign regions governed by different legal systems, would seem to suggest that they displayed greater risk-bearing qualities.

Another distinctly unique system they developed to enable them to make good use of their capital investment was the intra-community credit network — where one Chettiar would finance another. That speaks to a high degree of enterprise and trust. This is clearly suggestive of a system where mutual faith and a high degree of trust was central to their business enterprise.

While many Chettiar firms faded post-independence, a few built lasting business houses. What set them apart? The Chettiars began repatriating some of their capital back to India in order to invest during the 1940s, when World War II created highly profitable conditions for business.

Apart from textiles, a major area was plantations. Some Chettiars also ventured into Bombay. One such example is Alagappa Chettiar, who invested heavily in insurance companies but lost out due to overtrading. The MCT Group, which founded Indian Overseas Bank, also had investments in Elphinstone Mills. But large-scale domestic investment remained limited.

After independence, you see figures like M.A. Chidambaram, after whom the cricket stadium in Chennai is named, making more serious moves. He acquired Automobile Products of India, the makers of Lambretta scooters, and also invested in diesel engine production. Later, he diversified into chemicals.

The Murugappa Group is a standout example of Chettiar success. Two factors, I think, set them apart. First, the intrafamilial bonds were exceptionally strong, and the elders in the family ensured that the cohesive spirit was maintained across generations. Most business families begin to fragment by the third or fourth generation — but in their case, it seems clear this was anticipated and addressed early on.

Second, they maintained a disciplined focus on core competencies — especially engineering-related sectors like Tube Investments and Carborundum Universal. Only after consolidating in those sectors did they diversify, for instance, with the acquisition of Parry & Co., which was in a different line of business.

Lesson for entrepreneurs

What can today’s small and medium enterprises in India learn from the Chettiar model — especially in how to institutionalise trust, capital, and scale across generations?

I think the most important lesson that today’s entrepreneurs — small and medium included — can draw is the notion of trust and mutual accommodation, a feature central to the Chettiar model. This would enable entrepreneurs to optimise costs and cut down competition. The export-oriented Tiruppur knitwear industry is a good example of the Chettiar model.

Chettinad cuisine is famous for its fiery meat dishes, but the community began as vegetarian. Did their migrations reshape their cuisine? Food isn’t my area of expertise, but you could well be right. The Chettiars were — and are — devout Shaivites, and vegetarianism was a natural offshoot of this faith. In fact, the Tamil word for vegetarian food is ‘saiva saappadu’.

So yes, the long years of exposure to overseas cultures must have played a significant role in the evolution of their cuisine — from an exclusively vegetarian to a more inclusive cuisine. Their use of spices is also quite distinct from what you find in other parts of South India, and even here, it is possible to discern other influences.

You’ve written about efforts to rekindle the Chettiars’ entrepreneurial spirit. How far do you think this will go? Many Chettiars in the diaspora have moved into finance and IT, rather than traditional business. This shift worries some of the older generation, who feel there’s a disconnect from their industrial legacy. So conferences and community events have been organised to revive that entrepreneurial zeal. But honestly, I think that time is over. The chapter of Chettiar dominance in traditional sectors is closed.

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