In his latest book Fortune Seekers, economic historian Raman Mahadevan examines the ascent of the Chettiars — and the reasons their extensive Southeast Asian network did not endure.

While most Indian business histories concentrate on the Marwaris and Bania community, in Fortune Seekers, economic historian Raman Mahadevan focuses on the Natukottai Chettiars, a trading community from Tamil Nadu whose financial influence once spanned Southeast Asia. By 1929, their assets were estimated at ₹200 crore, a remarkable sum for a community of just over a lakh individuals. The Chettiars supported Burma’s rice industry and invested in rubber and tin production in Malaya, establishing one of the most widespread capital networks of their era. In this conversation with an online media outlet, Mahadevan reflects on their rise, risk tolerance, and eventual fall. Excerpts.

Eastern Bankers

The Chettiars were allegedly recognized as the 'bankers of the East'. How influential were they during their peak period?

They were significantly powerful and economically influential. Some estimates indicate that the overall assets of the Chettiar community, which were valued at approximately ₹10 crore in the 1880s, had by 1929 remarkably increased to about ₹200 crore. Considering that this was a small community — some surveys estimate their population was just around 1,25,000 in the 1930s — this represented an impressive accomplishment. Their migration to the Far East increased in the 1870s, spurred by the opening of the Suez Canal, which effectively reduced the distance between Asia and global markets. This had a significant impact on the entire commercialization process and generated business opportunities, which, in a way, initiated the movement of Chettiar capital to those areas. In Burma, for example, although Europeans owned the major rice mills, the financing of agricultural production was nearly entirely managed by the Chettiars. That’s where their profits originated. Likewise, the global automobile industry required rubber and tin — both sourced from Malaya — and once again, the Chettiars funded the production of these materials. In Ceylon, they financed non-European coffee, tea, and coconut plantations. The downturn began with the Great Depression and intensified with World War II. Hypothetically, one might argue that if these global disruptions had not taken place, India's economic landscape could have been quite different. If the Chettiars had successfully repatriated all that capital back to India, they could have potentially rivaled the Marwaris in Bombay and Calcutta.

What distinguished them from the Marwaris and Banias? One significant distinction was that the Chettiars traveled abroad in large numbers. The Marwaris did venture abroad as well, but in much smaller numbers. While many Marwaris were bankers, they were also chiefly traders. My theory posits that the shift from trade to manufacturing is more straightforward — their access to market and commercial insights afforded the trading class a particular advantage, giving them a head start in industrial initiatives. In western India, Marwaris and Gujarati Banias successfully entered fields such as paper, sugar, and textiles. However, the Chettiars’ domestic presence was relatively constrained until the 1930s, as much of their capital remained invested overseas.

More critically, since the return on investment through banking in Southeast Asia was substantially higher than in Indian industries, they had little inclination to invest in manufacturing. The risks undertaken by the Chettiars were also considerably greater compared to other business communities. All business communities take risks, of course, but the Chettiars, by relocating from South India to Southeast Asia and acquiring new languages, operating in distant foreign regions governed by different legal frameworks, seemed to exhibit more pronounced risk-bearing characteristics.

Another distinctly unique framework they established to optimize their capital investment was the intra-community credit network — where one Chettiar would fund another. This indicates a high level of entrepreneurship and confidence. This clearly implies a system where mutual trust and a significant degree of faith were central to their business operations.

While many Chettiar firms diminished after independence, a select few created enduring business establishments. What distinguished them? The Chettiars started repatriating some of their capital back to India for investment during the 1940s, a time when World War II created exceptionally lucrative conditions for business.

Besides textiles, another significant area was plantations. Some Chettiars also ventured into Bombay. A notable example is Alagappa Chettiar, who invested significantly in insurance companies but faced setbacks due to overtrading. The MCT Group, which established Indian Overseas Bank, also made investments in Elphinstone Mills. However, large-scale domestic investment remained constrained.

Post-independence, individuals such as M. A. Chidambaram, after whom the cricket stadium in Chennai is named, took more substantial actions. He acquired Automobile Products of India, the manufacturers of Lambretta scooters, and also invested in the production of diesel engines. Later, he expanded into the chemicals sector.

The Murugappa Group stands out as a prime example of Chettiar achievement. Two key factors, I believe, distinguish them. First, the intrafamilial ties were extraordinarily robust, and the senior members of the family ensured that the spirit of cohesion was upheld across generations. Most business families tend to fragment by the third or fourth generation — but in their situation, it appears this was anticipated and managed early on.

Second, they upheld a disciplined emphasis on core competencies — particularly in engineering-related fields like Tube Investments and Carborundum Universal. Only after consolidating in those areas did they diversify, for example, with the acquisition of Parry and Co. , which operated in a different sector.

A guide for business owners

What can today’s small and medium enterprises in India learn from the Chettiar model — particularly regarding the institutionalisation of trust, capital, and scale through generations?

I believe the key takeaway for today’s entrepreneurs — including those in small and medium enterprises — is the concept of trust and mutual cooperation, a fundamental aspect of the Chettiar model. This would allow entrepreneurs to optimize expenses and reduce competition. The export-driven Tiruppur knitwear sector exemplifies the Chettiar model well.

Chettinad cuisine is renowned for its spicy meat dishes; however, the community originally started as vegetarian. Did their migrations alter their cuisine? Food isn’t my area of expertise, but you might be correct. The Chettiars were — and still are — devoted Shaivites, making vegetarianism a natural consequence of their faith. In fact, the Tamil term for vegetarian food is ‘saiva saappadu’.

Hence, the lengthy exposure to international cultures must have significantly influenced the development of their cuisine — transitioning from entirely vegetarian to a broader culinary approach. Their spice usage is also notably different from that found in other regions of South India, and here too, one can identify various influences.

You’ve mentioned initiatives to reignite the Chettiars’ entrepreneurial spirit. How far do you think this will progress? Many Chettiars in the diaspora have transitioned into finance and IT, moving away from traditional businesses. This transition concerns some from the older generation, who perceive a disconnection from their industrial heritage. Consequently, conferences and community gatherings have been organized to rekindle that entrepreneurial spirit. However, to be honest, I think that era has passed. The period of Chettiar prominence in traditional sectors has concluded.

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