India’s rise and its likely role in institutions of global governance has spurred a heightened scholarly focus on India’s interests, its capabilities, and its values and priorities. While some recent books promise to shed light on the topic, few attempt to combine both political and economic explanations and domestic and international levels of analysis in a systematic fashion. Fewer still shed light on the interactions between the state and global institutions, on the one hand, and domestic actors, on the other. Aseema Sinha’s Globalizing India is an exception and is, therefore, both ambitious and timely.
If we are to understand how India is likely to engage with institutions of global governance, Sinha argues, we ought to begin by investigating how the state has responded to changes in international regimes in recent years. Focusing on India’s response to changes in the multilateral trade regime under the World Trade Organization, for example, Sinha argues that the Indian state led the charge and shaped and prodded business interests, which were quick to adjust once they were convinced that they could not resist a change in rules. Building on her earlier work on developmental states, she demonstrates how global markets and nonmarket rules at the WTO shape incentives for states and how state functionaries—both politicians and bureaucrats—cajole and incentivize the private sector to ensure compliance with global regimes. At the same time, the state engages at the international level in shaping the global order. India’s state actors, therefore, ensure that the relation between global markets and institutions and Indian actors are “reciprocal, dynamic and strategic” (p. 5).
Sinha develops her argument through three interrelated points. First, India’s growth story is not entirely a product of domestic liberalization and structural reforms. Global institutions as well as global markets have played a significant role in India’s economic rise. Second, even though global institutions such as the WTO have played a notable role, the state has not remained a passive rule taker in these negotiations. Third, not only has the state played a role in shaping global rules as well as pushing back against them, but it has also shaped the incentive structure for the domestic private sector, whose initial response to these negotiations was to do nothing.
Although it is well established that India’s economic growth began with the autonomous liberalization of economic policies in 1985 and 1991, Sinha points out that in the initial phase of that liberalization, Indian corporate actors were hesitant to integrate with global markets. Providing examples from both pharmaceutical and textile sectors, she shows how corporate actors did little to adjust to the anticipated changes emerging on the horizon as a result of the impending deadlines associated with the Trade-Related Intellectual Property Rights (TRIPS) agreement, as well as the expiration of the Agreement on Textile and Clothing (ATC). For a long time, the Indian pharmaceutical sector did not recognize the promise of market access for generics that accompanied the TRIPS agreement. Instead, it focused almost exclusively on the potential threat posed by the agreement. Similarly, even though the textile sector knew in 1994 that the ATC was going to expire in a decade, there was little evidence that the Indian textile industry was getting prepared to take advantage of the market opening that would result. This is contrary to our understanding of how the private sector behaves when the rules and incentives change and markets expand. This book tells us that businesses do not respond to market signals alone; they respond when those market signals are accompanied by nonmarket signals. It is the state that supplies these nonmarket signals in the form of publicly generated information and financial and other incentives to change behavior.
The literature on political economy not only would expect private-sector actors to change business plans but would, in fact, expect them to take charge in shaping the emerging regime. That is not what happened in India in the 1990s when rule changes were imminent. On the contrary, a group of politicians and bureaucrats, whom Sinha calls “woodwork reformers” (p. 5), took the lead in shaping the emerging rules to the extent they could and offered insights on emerging market opportunities to the private sector. As a result of these changes, for example, the Indian pharmaceutical sector emerged as a major generics producer. In textiles, Indian firms acquired foreign firms, integrated their supply chains, and embraced modernization and mechanization on an unprecedented scale.
The case studies provide us with unexpected insights about the private sector and business–government relations in India. First, contrary to our image of businesses pushing the frontiers of trade, Sinha paints a picture of a recalcitrant but ultimately nimble private sector. Second, globalization was supposed to have reduced state power and made the corporate sector independent of state intervention. The case studies here show that at least in the medium term, in an emerging power such as India, globalization actually increased coordination between public and private actors. Not only has the state not withered away as a result of globalization, but the latter has, in fact, revived state capacity and necessitated the creation of new institutional mechanisms that help shape and mediate a state’s response to global integration. This engagement with global markets and rules, the author argues, has an added payoff: Negotiators from emerging powers such as India have become more activist and assertive as they have learned from iterative interaction with others at these institutions.
Globalizing India makes three significant contributions: First, by simultaneously opening up two black boxes—the state as well as the international organization—Sinha provides us with a descriptive as well as analytical framework for studying interactions between the global and the domestic levels. Future scholars of globalization can examine the hypotheses that this study generates by applying the framework to other cases. Second, by providing a rigorously researched account of India’s response to changes in global rules and markets, the book fills a gap in the literature on middle and emerging powers’ engagement with international institutions. By focusing on the states’ interaction with both the international and the domestic level, it adds substantially to our understanding of the activism associated with rising powers. In addition to the existing explanations that focus on status seeking and playing to domestic constituencies, it shows that engagement with the global level unexpectedly strengthens state capacity. Finally, the book is an insightful and important addition to the growing but still relatively thin literature on state–business interaction in India.
The book also leaves us with important questions that future studies could pursue: Why did Indian businesses not respond in the 1990s? Did operating for decades in a closed economy make them change resistant? Was the private sector satisfied with the opening up in 1991 that provided a large and growing domestic market? Were there still significant barriers in the domestic policy structure that made global markets too costly to seek? On a different note, how generalizable is India’s experience? Can the state play such a role where the private sector has always enjoyed relative freedom and where globalization served to further increase the private sector’s independence from the state? The insights and questions that the book generates make it required reading for scholars and practitioners with an interest in global governance, state–business relations, the role of rising powers, and, specifically, Indian politics.
