PASSING THE TORCH: THE NEXT DECADE OF FAMILY BUSINESSES IN INDIA
Introduction
Over the next ten years, India will see one of its biggest business transitions. Thousands of first-generation family businesses, built with hard work and sacrifice, will pass into the hands of the second generation.
This shift matters deeply because family enterprises aren’t just part of India’s economy, they are the economy. They contribute over 75% of India’s GDP today and employ nearly two-thirds of the workforce. The way these transitions unfold will shape India’s economic story for decades to come.
Why this transition is unavoidable
- A recent SPJIMR study found that both generations are already active in 70% of family firms, but only 21% have a clear succession plan.
- According to Grant Thornton, around 80% of Indian businesses are family-owned. Yet, more than 70% fail to survive beyond the second generation.
- India is on the verge of a $1.5 trillion wealth transfer in the next decade as first-generation billionaires and entrepreneurs pass the baton.
These numbers show both the promise and the fragility of the coming change.
Opportunities the next generation brings
- Fresh energy and modern vision
The new generation is better equipped with global exposure and digital-first thinking. In fact, a survey found that only 25% of Indian family businesses currently focus on technology, meaning successors who embrace digital tools can get a sharp competitive edge.
- Stronger governance
Increasingly, families are setting up constitutions and advisory boards. According to McKinsey, firms with structured governance earned Rs. 100-300 crore more in economic profit over five years compared to informal setups.
- Diversity in leadership
Over 50% of Indian family businesses already have women in senior management roles, a trend that’s expected to rise as generational transitions unfold.
The Challenges No One Can Ignore
- Lack of interest among heirs:
HSBC research shows that while 88% of Indian founders trust the next generation’s ability, only 7% of heirs actually want to join the family business.
- High failure rates:
Globally, just 30% of family firms make it to the second generation, 12% to the third and a tiny 3% to the fourth. India mirrors these statistics closely.
- Emotional and control struggles:
Many founders struggle to let go, while heirs feel pressured to live up to expectations. This emotional weight is often more complex than financial or operational issues.
Preparing for a smoother handover
- Plan early: Create succession roadmaps with education, external work experience and gradual leadership exposure.
- Balance family and professionalism: Introduce boards, external advisors and clear decision-making structures.
- Keep choice alive: A business thrives when successors step in with passion, not obligation.
- Adapt to change: Digital adoption and sustainability will define the next decade, ignoring them is no longer an option.
A Lesson from India’s biggest family business
Reliance Industries, India’s largest family enterprise, is carefully planning leadership transfer from Mukesh Ambani to his children. Even with professional advisors and global scale, the Ambani’s face the same fundamental question every family business does: How do you protect a legacy while allowing it to evolve?
Conclusion
For India’s first-generation entrepreneurs, the next decade will be about trusting the process of succession. Done right, it can unlock:
- More innovative, future-ready companies
- A smoother $1.5 trillion wealth transfer
- Families united by purpose, not divided by power
Handled poorly, it could mean lost businesses, broken legacies and missed opportunities.
The truth is simple: the future of Indian family businesses will not only be inherited, it will be re-imagined by the next generation.
