india: rising power or a mere revolution of rising expectations?: india as a new

8/18/2019 India: Rising Power or a Mere Revolution of Rising Expectations?: India as a New

1/26

1

India: Rising Power or a Mere Revolution of Rising Expectations?: India as a New

BRIC. Aseema Sinha

A VERY ROUGH FIRST DRAFT

MARCH 8 TH , 2008.

Presented at “Emerging Powers in the Global System” Workshop

UW-MADISON


2/26

2

India: Rising Power or a Mere Revolution of Rising Expectations?: India as a New

BRIC

Introduction:

The international system of the twenty-first century will be marked by a seemingcontradiction: one the one hand, fragmentation; on the other, growing globalization.On the level of relations between states, the new order will be more like the Europeanstate-system of the 18 th and 19 th century than the rigid patterns of the cold war. It willcontain at least six major powers—The United States, Europe, China, Japan, Russia

and probably India—as well as a multiplicity of medium-sized and smaller countries.At the same time, international relations have become truly global for the first time.Communications are instantaneous the world economy operates on all continentssimultaneously. A whole set of issues has surfaced that can only be dealt with on aworldwide basis such as nuclear proliferation, the environment, the populationexplosion and economic interdependence.” 1 Henry Kissinger (1994, 23-24).

The interest in India, and its increasing global prominence is recent and new. A quick

analysis of global newspapers shows that the global media started paying attention to India

around 2001 or 2003, when new stories on this latest darling boy of the global investors and

political leaders, became huge. 2 Suddenly, India was on the top covers of the Newsweek, and

Time, as well as Business Week. 3 This sudden media attention was accompanied by a

simultaneous attention to a group of secondary powers, namely, Brazil, India, China and

Russia, as a investment banker—Goldman Sachs—came out with a document titled,

“Dreaming with BRICs: the Path to 2050,” which received a lot of attention in the financial

1 Henry Kissinger, Diplomacy , New York: Simon and Schuster, 1994.2 Add newspaper analysis data.3 Need citations here.


3/26

3

world of investors, venture capitalists, and media spinners. 4 The study written by Dominic

Wilson and Roopa Purushothaman declared, “Over the next few decades, the growth

generated by the large developing countries, particularly the BRICS (Brazil, India, Russia and

China) could become a much larger force in the world economy than its is now—and much

larger than many investors currently expect.” 5 The first BRICs study noted that, “India has the

potential to show the fastest growth over the next 30-50 years. . by 2050, only India (out of

the BRICs), on our projections would be recording growth rates significantly above 3

percent.” 6 In a recent re-assessment, Goldman Sachs noted, “India’s high growth rate since

2003 represents a structural increase rather than simply a cyclical upturn. We project India’s potential or sustainable growth rate at about 8% until 2020. . . Our assessment suggests that

India’s influence on the world economy will be bigger and quicker than implied in our

previously published BRICs research.” 7 This attention by Goldman Sachs, a prominent

financial company, was not isolated. Since 2003 India’s growth rates have been 8-9 percent,

and its economy stable. This has generated a remarkable buzz about India both within and on

the world stage.

It’s this supposed simultaneous coincidence –the rise of India as a latecomer on the

world stage, and the transformation in world’s power structures—which deserves further

scrutiny and raises a few questions. Is the world, indeed, becoming multi-polar? Is India an

emergent power, with capacity to transform its potential and growth into actual and real

exercise of power? If so, what kind of power would India become? Would it be rule-maker,

shaping structures of global power, rather than rule-taker? And, what would this mean for the

4 Insert citation .5 Insert BRICs study.6 Ibid.7 Goldman Sachs, India’s Rising Growth Potential, Global Economics Paper No: 152.


4/26

4

global structures of power and inter-state interactions? This paper addresses both the

transformation in global political economy and its implications for India’s role in that

transformation, as well the ambivalence of that description of India.

Briefly, I argue that while India is a rising force, the instruments to translate that force

into power, are not in place. Important aspects of India’s domestic structure—coalition

government and sharing of power--will make this translation slower than expected. Second,

one important mechanism of this transformation—ideas and ideology—will nudge India

toward a more cautious approach to global power. Yet, actions of hegemonic power like the

United States, and the EU, are having an unintended effect in projecting India to a status ofworld power even before India itself is ready for a global role. Yet, India behaves and acts at

the global level in very different ways than before. Most important, globalization and this

sudden global prominence has created nascent but definite interests –winners—in changing

India’s relationship to the global system. It’s these groups and actors who will be the

supporters of India’s growing power in the years to come.

India is a rising power in many dimensions. That is, very quickly, in the last 5 years, it

has acquired a global prestige, role and attention. This change over time is a significant fact

of world politics with a potential to re-shape both global economic and global governance

institutions. Yet, by more rigorous standards of power, outlined for example by Barnett and

Duvvall, (2005, 12) India falls short of great power status in important dimensions. 8 Third,

we need some new concepts to under stand the rise of countries like India and even China that

do not exercise power in the same way that older classic powers exercised them. The change

8 Michael Barnett and Raymond Duvall, eds.. Power in Global Governance , CambridgeUniversity Press, 2005.


5/26

5

has to do both with the changing structure of global power and of the kind of powers these

are.

Theoretical Debates: Power, Anarchy, and Hierarchy in International Relations

A project that looks at the power and potential of rising powers must be able to do four

things:

(a) Its important to assess the formal indices of power. Military strength is no longer as the

only criteria for assessing the prospects of power in the international world. Yet, economic

growth and foreign trade are too nebulous. When does economic growth translate intoeconomic power? Is economic openness necessary for economic power? The experience of

India and China suggests that somewhat conservative international strategies—low debt

profile and control over financial openness-- are good for global economic power. If so, this

suggests some modification to the usual assessments of economic indices of power.

Moreover, India is trying to leverage “soft power” as a medium of power at the international

level. Will this strategy work and will it urge us to re-think of ways in which we

conceptualize power at the international level?

(b) We must incorporate an analysis of the global incentives of national rulers, keeping in

mind their domestic, global, as well as regional ambitions. We need to integrate domestic

politics into studies of global power but not in the usual way. First, domestic considerations

do play a role in shaping when and how national leaders seek global ambitions. Yet,

simultaneously, global and regional ambitions also must be factored in an analysis of when

and why countries seek greater role in the international world. Overall, we must try to

integrate a study of a multi-faceted incentive structure of rulers into our analysis. In addition,


6/26

6

economic actors such as business groups, and globally oriented national companies, have

emerged as important actors on the global stage, leading us to analyze their incentives and

ambitions. Such actors—in contrast to MNCS—try to leverage their global strengths for

national political power and do shape a country’s prospects for global power. The analysis of

how private power shapes national power at the global level must be integrated into our

studies of emerging nations.

(c) We must be able to evaluate the domestic mechanisms that allow or hinder the translation

of power into real capacity. Here, I find the notion of statecraft to be an interesting and useful

one. It has been used in many writings, and David Baldwin outlined it as a “technique offoreign policy (1985)”, but it may be important to expand that concept to include how

domestic actors, craft their visions, and potential powers into real and actual power for the

global order.

(d) And, we must be able to assess, the strategic problems confronted by rising powers, in

terms of the new international system, other global powers, as well as the strategic

consequences of their rising power status.

Power and Authority at the Global Level

Is the world becoming multi-polar? The first question to evaluate is whether the world is

indeed becoming multi-polar? Three scenarios are possible. One, is status quo; the second,

alternative is some change within a largely uni-polar world, where new powers emerge but the

structural properties of the world system do not change, and the third is a multi-polar world

where new powers claim new power in established institutions and also change the dynamics

of inter-state alliances and organizations. It is clear that we have had some change ever since


7/26

7

the early 1990s, with the end of the cold war and the demise of the second pole, the Soviet

Union. But, its not very clear what the new configuration looks like. Is it analogous to the

second scenario or the third?

This workshop starts with the presumption that the world is indeed becoming multi-

polar. What’s the nature of this new multi-polar world and what are its implications for global

governance? We note, “The twenty first century will see a more multi-polar international

system. Although the United States, the sole superpower since the breakup of the Soviet

Union, currently enjoys overwhelming economic, military, and soft power advantages over

potential rivals, US hegemony has passed its peak. Nor will Western European countries bethe US’ main foil in international politics in the decades to come, despite their recent moves

toward tighter monetary and political union, which enhances their relative power and

influence. Instead, states that looked weak at the close of the Second World War will join the

ranks of major powers. Four new poles of this century will be those countries jointly dubbed

the BRICs. In order of rising global influence, they are China, India, Brazil, and Russia.” 9

Parag Khanna writes, “Just a few years ago, America’s hold on global power seemed

unshakable. But, a lot has changed while we have been at Iraq—and the new President is

going to be dealing with not only a triumphant China and retooled Europe but also the quite

rise of a second world.” 10 Daniel Drezner notes, “Throughout the 20 th century, the list of the

world’s great powers was predictably short: The United States, the Soviet Union, Japan and

northwestern Europe. The twenty-first century will be different. China and India are

emerging as economic and political heavyweights: China holds over a trillion dollars in hard

9 Leslie Armijo and Aseema Sinha, Emerging Powers in the Global System,” ResearchProposal.10 Parag Khanna, “Who shrank the Superpower,” NYT times magazine, January 27,2008.


8/26

8

currency reserves, India’s high tech sector is growing by leaps and bounds, and both

countries, already recognized nuclear powers, are developing blue water navies. The National

intelligence Council, a US government think tank, projects that by 2025, China and India will

have the world’s second, and fourth largest economies, respectively. Such growth is opening

the way for a multi polar era in world politics.” 11 In a recent re-assessment, 2007, Goldman

Sachs noted that the BRICs are well on their way to living up to these expectations, and that

combined GDP would exceed the G6 GDP by 2032 rather than 2041. 12 Consequently, as of

May 24, 2006, investors poured 5.5 billion into BRIC funds. 13 The initial prediction in 2003

brought a buzz around the countries. Fund companies including HSBC, Allianz Globalinvestors, Schroeder’s Investment Management, and Franklin Templeton Investments started

selling BRICs funds in recent years. Goldman Sachs Asset Management recently launched a

BRICs fund in European countries such as Britain, Spain and Italy. It consists of 25-35 stocks

mainly form Brazil, Russia, India and China. 14 In power terms, the group of seven has invited

BRICs finance ministers to join them at virtually every meeting held since the end of 2004. 15

It’s also important to note that the source of the power of BRICs lies not only in their

supposed rising GDP but also because they have current-account surplus. They are not

dependant upon foreign investors and India and China are holding significant foreign

exchange reserves. In 2007, China held 1528 billion dollars in reserves, India, 290 billion,

and Japan 996 billion, and Russia, 481 billion.

There is clear evidence of the rise of new powers, and their attempt to seek to re-order

11 Daniel Drezner, The new World Order,” Foreign Affairs, March-April 2007.12 Goldman Sachs, 2007 reports.13 Sonia Ryst, How Sturdy are the BRICs” Business Week , May 31, 2006.14 Ibid.15 Ibid.


9/26

9

global relations. The claims of India, Brazil, India, Germany, and Japan, to attempt to reform

the UN system and include themselves in the Security Council, is one stark example of such a

transformation. There has been discussion of increasing the number of permanent members.

Brazil, India, Japan and Germany made a strong case for their inclusion and for expanding the

Social Security council and even formed a G-4 grouping for coordinating their actions. In

2003, Kofi Annan asked a team of advisors to come up with recommendations for UN reform.

Recently, Japan withdrew from this grouping. In response, a group that opposes is “Uniting

for Consensus,” and consists of Italy, South Korea, Pakistan, Argentina, and Mexico. This

reform highlights the complexity of understanding the nature of the new global system.

Three broad aspects deserve mention. First, its not clear, which countries should be

part of the emerging powers group? Some arguments have been made for including South

Africa—BRICS, BRICA (where A would stand for Arab countries or ASEAN countries). It

must be noted that Goldman Sachs has not felt the need to expand beyond BRICs and

continues to see the four countries separate from other key emerging markets. Sandra Lawson

of the Goldman Sachs says,” We have not changed our view. The reason we selected the four

initially was their potential to be really significant players and to change the face of the global

economy.” Yet, Goldman Sachs also recognizes that other emerging markets are poised for

growth and will play an increasingly important role in the future global economy. It has

identifed 11 countries, which it calls, next N-11 as the potential BRICs of the future. These

are Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines,

Turkey, and Vietnam. Other people have noted that Russia’s inclusion in this group is a

misnomer as its growth is based on oil not on growth promoting institutions and leaves Russia

at the mercy of global energy markets. For Russia energy related revenues account for more


10/26

10

than 20 percent of GDP. Analysts have also noted that Russia does not attract as much

foreign direct investment as the other three. In 2003, FDI in India was 4,3 billion, 10.1 billion

in Brazil, 53.5 billion in China, and only 1.1 billion in Russia. 16 A related issue is that the

power differential between Brazil, India and the other powers such as Argentina, Pakistan etc.

is not very high and thus, the rise of these powers creates conflict and contestation among the

secondary powers. Such conflict and contestation is clearly apparent over UN Security

Council reform, which may explain why it has take so long to implement and seems to have

gone nowhere. Despite the coming together of G 4, there are some serious opponents of each

country’s inclusion in the UN. South and North Korea are against Japan’s seat in the SC,Pakistan is against India’s, Mexico is against Brazil’s, Italy is against Germany’s bid. And,

Philippines refuses to cooperate until the implications of increasing the membership are

examined. African Union, a power body within the UN with 53 votes in the UN general

assembly, has also raised some objections to the expansion of the SC. 17 There is some

indication that opponents have also organised together against the reform, thereby delaying

the process. An envoy of South Korea confirmed, “Our position is checking such an attempt

[for the increase of standing memberships of SC by six] by Japan in cooperation with other

middle power states. Under that context, Japan’s bid to join the UNSC (as a permanent

member) will be thwarted.” 18 There are also some interesting differences between India and

Brazil’s positions on the kind of inclusion that they are willing to tolerate. Although both

countries are adopting similar strategies in that they are building alliances with other

16 Ian Bremmer, Taking a Brick out of BRIC: Russia does not belong in the same leagueas Brazil, India, and China,” Fortune , February 7, 2006.17 African Union Pours Cold Water on India’s Campaign for Un seat,” need source,August 6, 2005.18 “South Korea Opposes Increasing Un Security Council Permanent Seats,” Yonhao, South Korean news agency, April 2, 2005,


11/26

11

countries, Brazil will accept a Security Council membership even without veto power, while

India will refuse to accept without veto power. This, conflict amongst the aspiring powers,

increases the power of such hegemonic powers such as the United States and EU. The

proposed reform seems to have been postponed till 2020 when a conference to review the

structure of the SC will take place, and with the withdrawal of Japan from the G-4

resolution. 19 Thus, while it’s clear that new powers are emerging; it’s not clear what the new

different world system should look like and distributional conflict among the group of

secondary powers should lend pause to our assessment that a fully formed alternative world

system has taken shape. Third, the large number of developing and least developing countiesstill seek to align themselves with the US rather than India or China. Thus, while, new

powers have emerged, they have not fully transformed the alliance patterns and the way

international negotiations are conducted. Moreover, the rise of these new powers does

increase competition and conflict within the system and the birth of countervailing power

within each of the regions: Argentina, Mexico versus Brazil, Pakistan versus India, Japan

versus China. These assessments generate an important research agenda for a BRICs project,

which is to assess what the apparent power of these countries is doing to other regional

aspirants for power. A related aspect is the relationship of these rising powers to least or other

developing countries. The rise of these powers is likely to increase inequalities amongst the

developing world.

The second set of issues relates to the nature of international regimes and governance

institutions. Is the rise of these powers likely to create nested or parallel institutions

(Aggarwal 1998)? Aggarwal defines nested institutions as the creation of broader and

19 Japan to Give up adoption of G-4 UNSC reform resolution,” August 21, 2005.


12/26

12

narrower institutions in hierarchical fashion, while parallel institutions is when a division of

labor type of institutions is created. What type of institutional creation and bargaining about

institutions are we likely to see? At one level, all these powers seek to be included in the

existing institutions, as they seek recognition and power within the established structures of

power. This suggests that we will see an impetus of change within existing institutions.

Gordon Brown, the British PM's call for expanding the G-8 is one such move. Yet, it’s also

possible that parallel institutional linkages get formed as in the case of India, Brazil and South

Africa grouping or the G-4 grouping. One future research question would be to assess the

nature of the institutional structure that emerges in the next 5-10 years.

Sources of Power in India’s Rising Power

The single most important source of India’s rising power in the 2000s is economic. In

the words of Sanjaya Baru, “. . [In India] the acceleration of growth over the past two decades

has already had strategic consequences” (2007, 329). It’s worth paying some attention to the

strategic consequences of India’s growth but also its sources. Four aspects of India’s growth

trajectory are crucial for its growing global role. First, its population size; India will overtake

China’s population in 2040. Second, the prospects of long-run growth are around 5-8 percent,

which depends upon demographics and government’s education policy. Third, its rising

foreign exchange reserves, and greater global integration; as trade as a proportion of the GDP

rises, India will acquire greater stakes in its own global power. And lastly, the rise of Indian

multinationals and the global activities of Indian companies will add depth to India’s global

activities.


13/26

13

In late 1990s and early 2000s, policy scholars began to note India’s rising

prominence. A RAND study in 2000 introduced an economic dimension when it argued that

if India could sustain a rapid growth rate into 2000-10015, then there would be a major re-

ordering of Asian power relations (Yeh and Zycher 2000). Ashley Tellis (2001) also noted

the economic basis of India’s global power. India’s economic growth in the past three years

has averaged 8-9 percent a year contributing to a current euphoria about India’s power and

status.

Table 1: Growth rate of GDP in IndiaGDP

Growth rate in %1991 11992 51993 51994 71995 81996 71997 41998 61999 72000 4

2001 52002 42003 82004 82005 9.22006 9.62007 8.5* /8.7**

*Reserve bank of India Estimates** CSO Estimates/IMF Estimates

What is important to note about India’s economic boom is that its changing India very

rapidly. Merchandise exports in current dollars were 18.1 billion in 1990-1991 and doubled

for the first time in 1999-2000. In the recent period, they doubled in just three years: from

52.7 billion in 2002-2003 to 102.7 billion in 2005-2006. So, it’s this pace of economic


14/26


15/26

15

Also, given agriculture’s role in India’s GDP and more significantly, its role in terms of the

share of income, as well as its largely subsistence nature, India’s global economic interactions

continue to be a combination of aggressive and defensive actions. Thus, India’s current

economic assets only refer only to potential and not reality. What is needed to translate

India’s promise into real power?

Domestic and Global Mechanisms of Achieving Great Power Status

Despite these encouraging signs, as well as changes in India’s behavior at the globallevel, I argue that India’s rise as a new power needs certain domestic and global mechanisms

of transformation. Economic power in itself is not enough to translate into real global power

or in the words of Ferguson (2001) to “mobilize” a nation. Statecraft may be needed to

transform potential into reality. Niall Ferguson (2001) argues that “Economic resources are

important, of course, but they are not the sole determinant of power” (Ferguson 2001, 418).

Analogously, I argue that in trying to assess if the BRIC countries are really powerful, we

need to do much more analysis and research into the pre-requisites for the transformation of

economic power into global power. For India and other similar current powers, one could

suggest that both domestic and external factors are crucial to this transformation. Ferguson

identifies the “quality of a bureaucratic organization in both the state and the private sector

can therefore be as important as the quality of military organization.” In India’s case, the

private sector is beginning to play a positive role in translating rising potential into actual

power. India’s business actors have become global players and their market and political

actions raise India’s power status at the global level.


16/26

16

Global Role and Activities of Indian Business

Most analysis of changes in great power status and inter-state cooperation focus on

states and rulers. Yet, with globalization and increasing global inter-dependence, firms,

businesses and corporate actors play an under-studied role in shaping the global power of

states. As economic power translates directly into global power, economic actors should be

expected to have significant impact on a country’s power, aspirations and effectiveness in

achieving its power ambitions. In this section I outline the role of Indian business at theglobal level and try to assess if the global rise of Indian business enhances India’s global

power.

Alan Rosling, Executive Director, Tata Sons said in an interview,

Indian companies have been far more successful than companies from other emergingmarkets. This is because our management is strong and we have a more Western styleof management. There are people who can be brought in from the outside (people likeme) and we fit relatively simply into the Tata culture. The challenges we face would

be less than the challenges for a former state-controlled Chinese company that is tryingto internationalize. In 2004, we had only $2.4 billion revenues from overseas (it was$10.8 billion in FY 07).”

21

Collective action of business in a closed economy like India (India remained quite

closed till 1991) is unlikely to be affected by international factors. Yet, the closed nature of

the Indian political economy from 1950s to early 1990s led a sectoral business association like

CEI (so named at that time) to specialize in parallel international activities starting in the mid

1980s. At that time, FICCI dominated official international activities through its control and

21http://www.outlookbusiness.com/inner.aspx?articleid=767&subcatgid=9&editionid=24&catgid=11


17/26

17

monopoly of the Joint Business councils. Joint Business Councils consisted of businessmen

from India and different nations as well as government officials of the two countries. In 1990,

around 30-40 joint business councils with different countries were sponsored by FICCI.

Rivalry over the Joint Business Councils has always marked conflict between FICCI, and

ASSOCHAM in the 1980s and 1990s. 22 CEI found itself completely excluded from these

business councils. This led CEI to initiate independent and parallel links with international

business actors.

CEI (then called AEIE) also started specializing in organizing trade fairs and

exhibitions in the mid to late 1970s; in 1976 it organized its first trade fair. The fairs providedan important service to its membership base: Marketing and exporting skills. These skills

while not completely necessary in the closed economy like India allowed companies to

become more competitive and establish global technological and marketing connections.

Second, this allowed CEI to open a parallel line to international firms, and other international

actors such as World Economic Forum, and business associations, such as the Confederation

of British Industry or United States Chamber of Commerce. The Engineering fair, titled

Indian Engineering Trade fair, and the Auto Export Fair became a staple of CII’s activities.

Initially, the Engineering fair and the Auto fairs were held every four years but they became

so popular that they began to be held every two years. 23

Further, CII established international offices in collaboration with the national or

sectoral business association of the relevant country. The first international office was in

22“Assocham to strengthen Overseas Links,” Business Standard , 2 July 2000. “ApexChambers Agree to Restructure JBC’s Secretariat,” The Observer (New Delhi), 15 July1995; “Unholy Chamber Wars over JBC,” M.P Chronicle (Bhopal), 4 August 2000.23The engineering trade fair was held in 1993, 1997, 1999, and 2001. The Auto Expo washeld in 1993, 1996, 1998, and 2000.


18/26

18

Saudi Arabia. Since CEI modeled itself after the Confederation of British industries, United

Kingdom has continued to be an important office. In 1988 CEI had four international offices.

As globalization and competition with FICCI accelerated, CII continued to set up international

offices in many countries. 24 Between 1994 and 1996 there was a massive spurt as six new

offices were set up. By 2001, CII had 11 offices with an annual expenditure of Rs. 28.52

million. In 2004 it had 14 offices and a new office had been set up in Geneva to monitor the

activities of the WTO, an interesting development (see Table 5 and Figure II).

Table 2:Expansion of International Activities of CII

Number of International

Offices

Total Expenditure on International Offic

(in Rs. Million)1990 3 3.331991 3 4.191992 3 2.361993 2 2.911994 3 4.201996 10 22.181997 12 27.861998 13 36.191999 12 32.302000 8 29.902001 11 28.522004 15 Not AvailableSource: Annual Report of CII (Various Years).

Note: Data for 1995 was not found as the relevant Annual report was not available.

24One of its most active international offices is in Singapore. Shomikho’s Raha’sexplores this aspect in his ongoing doctoral thesis, "Changing Reason of State in India:Domestic Structural influence in selected cases of the Ganga water-sharing dispute,nuclear policy and industry partnership with Singapore." Trinity College, CambridgeUniversity.


19/26

19

Moreover, the linkage of CII with World Economic Form established in the mid 1980s

was to pay rich dividends after globalization when state, business, and provincial-level actors,

all sought the network opportunities that such a forum provided. It was Prime Minister Rajiv

Gandhi and industrialist Rahul Bajaj 25 who facilitated the initial links between CEI and

WEF. 26 In 1982 Rajiv Gandhi visited Switzerland and suggested that WEF hold a summit in

India, where he would ensure that his mother, Mrs. Indira Gandhi, the prime minister would

address the summit. WEF needed a business association linkage in India; this was facilitated

by Rahul Bajaj who took Rajiv Gandhi’s idea to Tarun Das. 27 CEI/AIEI was cash rich and

excluded from the domestic political and business process. They saw in this linkage a crucial

opportunity. In 1984 WEF held its first Indian summit in India. As it happened, Rajiv

Gandhi inaugurated it, after his mother’s assassination in 1984. Since then, WEF and CII’s

25Rahul Bajaj is CEO of Bajaj Auto, India’s premier scooter company.26World Economic Forum officials confirm this. Ms. Collette Mathur, the director ofWEF outlined the emergence of WEF-CII connections in a recent speech. See GeorgeSkaria, “Celebrating India’s Participation: Rahul Bajaj gets special mention in Schwab,Collette’s speech,” The Financial Express , 22 January 2004.http://www.financialexpress.com/fe_full_story.php?content_id=50980 Accessed onDecember 15, 2004.27Interview with a CII official, New Delhi, 11 March 2004.


20/26

20

linkage has become a crucial high profile event. 28 Thus, openings in the domestic political

environment and alliance with a reformist Prime Minister coincided with international

activities of CII.

In the 2000s, Indian business ahs become quite active in international foras. Mergers,

acquisitions, court cases, and capturing markets in the western world became important

strategies. In Feb 2005, the TATA group setup an office in Washington DC to deal with the

complex regulatory environment in United States as Ratan Tata unveiled a more aggressive

global strategy of acquisitions. Ranbaxy already has an office in the US since the 1990s and

has also acquired companies.Table 3: Global Acquisitions and Mergers of Prominent Indian Business

TATA

When Name of Company

Feb-00 Tetley Group

Sep-02 Regent Hotel (renamed Taj Lands End)

Jul-03 Gemplex

Nov-04 Tyco Global Network

Feb-05 Hispano Carrocera

Mar-05 Indo Maroc Phosphore S.A. (IMACID)

Jul-05 The Pierre

Jul-05 Indigene Pharmaceuticals Inc

Jul-05 Teleglobe International

Aug-05 INCAT International

Sep-05 Wündsch Weidinger

Oct-05 Pearl Group

Oct-05 Financial Network Services

Oct-05 Good Earth Corporation & FMali Herb Inc

Nov-05 Comicrom

Dec-05 Starwood Group (W Hotel)

Dec-05 Brunner Mond

Jan-06 Tertia Edusoft

Jan-06 GmbhTertia Edusoft AGMay-06 JEMCA

Jun-06 Eight 'O Clock Coffee Company

Oct-06 Energy Brands Inc

28 N Vidyasagar, “Get, Set, Grow,” Times of India: February 11, 2004http://www.ibef.org/artdisplay.aspx?cat_id=105&art_id=1420 . Accessed on 26 th ofJanuary 2005.


21/26

21

Dec-06 Corus

Total 23

Table 4: Global Acquisitions and Mergers of Prominent Indian Business

Reliance


FLAG Telecom

Trevira

Total

MITTAL


the Iron & Steel Company of Trinidad & Tobago

Sibalsa

Sidbec-DoscoHamburger Stahlwerke

Inland Steel Company

Unimetal Group

Alfasid

Sidex

Nova Hut

Polskie Huty Stali

Skopje

BH Steel

International Steel Group

Kryvorizhstal

Arcelor

Sicartsa from Grupo Villacero

Total

Ranbaxy


Ohm Lab

Bayer's genetic business

genetic product portfolio from EFARMES

Terapia

generic business of Allen SpA, a division of GlaxoSmithKline (GSK)

Ethimed NV

Total

Source: Author’s Database collected from the websites of companies and newspapers


22/26

22

A recent study by Outlook Business has documented that Indian companies are

building assets, hiring people, and acquiring revenues abroad. Table 5 highlights this trend,

which started very recently, only in 2003 or 2004.

Table 5: Overseas Revenues of Indian Companies

Overseas Revenues

Rs. Crore

As a % of Total Revenues

Patni Computer Systems 2,391.7 89.7

Ranbaxy Laboratories 4,959.9 80.0

Tata Tea 3,031.0 73.9

Videsh Sanchar Nigam 6,377.0 72.0

Dr. Reddy's Laboratories 4,474.7 69.7

Punj Lloyd 3,514.5 67.5

GHCL 1.741.8 61.7

Tata Consultancy Services 11,336.3 59.9

Amtek Auto 1,449.1 54.8

Bharat Forge 2.329.9 54.5

Source: M. Anand, Global 50: India Inc’s World Wide Web,” India Abroad, February 22, 2008.

This Outlook Business highlights the fact that Indian companies are using a soft-touch

approach to acquisitions, not imposing the culture of this companies but displaying

remarkable deftness and restraint in managing transitions and acquisitions. This has helped

India corporate sector build a reputation of “benign acquires.” As noted by the business

Outlook study, in a world market that has an abundance of distressed assets, this gives Indian

companies an edge over other bidders.” 29

29 M. Anand, “Global 50: India Inc’s World Wide Web,” India Abroad , Feb 22, 2008, p,A 35.


23/26

23

State Power and State Capacity

India’s state has been labeled and categorized as a “soft state”, a failed developmental

state, and an intermediate state. Each of these definitional categories presumed a low to

moderate growth and most crucially, a closed economy. In India after the economy opened

up, we have seen a rise of investment/GDP ratio to 36 percent in 2007-2008, and high tax

compliance. This has increased the fiscal capacity of the state (Tax/GDP ratio is up from 9.2

percent to 12.5 percent). Yet, what is crucial for state global power is the use of that state

capacity for the purposes of maintaining accelerated growth (9 percent), low inflation, andsustainable development, which does not stress the pursuit of a growth agenda. Thus, what is

crucial in terms of state power is the stabilization of the Initial growth momentum for the next

phase, when the world economy is slowing down. Despite this infrastructure of power, global

power needs ideas and strong visions to make claims. Has the Indian leadership attempted

such a move toward great power ideas? Will that prove sufficient?

India’s Strategic Community and Elites: Leadership and Ideology

Jeffrey Legro has argued that “great power ideas” or the collective ideas of major

powers make a difference in world politics (2005) and that “international relations are shaped

not just by the power states have but the ideas the states hold abut how that power should be

used” (Legro 2005, 3). Echoing a point that Legro makes, a retired Indian Ambassador said to

me, “India wants to be a Security Council member but does it know what it wants to do with

that membership. Does it have vision for what it wants with that power?” 30 There is some

30Interview, January 2008, mew Delhi, IIC.


24/26

24

evidence of great power ideas that Indian leadership has attempted to craft in the last 10-15

years or so. After 1991, Narasimha Rao, India’s PM of the time, re-oriented India’s

relationship with Israel, which at that time amounted to a significant turnaround. In 1985,

Rajiv Gandhi initiated openness with the West, which meant turning back on long-standing

suspicion of the west. More significantly, Atal Vhiari Vajpayee’s government after 1999,

initiated a significant change toward the United States, which was followed by Manmohan

Singh’s government. Manmohan Singh India’s current PM has articulated his strategic vision

carefully. In 2005 Manmohan Singh, India’s Prime Minister, declared: “Being an open

democratic polity and an open economy empowers India.”31

Analogously, an India negotiator

said to me: “In the earlier era India was a free rider, now it’s a negotiator.” 32 Moreover, after

2004 or so, Indian elites seem to have recognized that India is being recognized as a power

analogous to China. More recently, Indian policy makers and leaders articulate a vision of

soft power as underlying India’s claim to power. As India’s Ambassador to United States

said recently,

The United States is, and will probably long remain, the preeminent global power, interms of its economic strength, scientific and technological prowess, innovativeability, and military might. But it was merely a matter of time before India rose to the

position of one among the three largest economies in the world. India is a bastion ofdemocracy in the world’s most diverse neighborhood; it is an anchor of stability in ahighly volatile region; and increasingly a locomotive of stable and sustainable regionaleconomic growth. India has historically been, and remains a benign status-quo powerwithout any expansions desire; India was only interested in projecting soft power.”Ronen Sen, [Indian Ambassador to the US], lauds US-India relations, promises moreto come,” India Abroad, February 15, 2008, p, A8.

31 Manmohan Singh, “Open Democracy and Open Economy,” In Indian Express : NorthAmerican Edition, Vol. VI, No. 12, August 26, 2005, p, 8.32 Interview with author, Washington DC, September 1, 2005.


25/26

25

Yet, India lacks a coherent strategic vision of what to do with rising power and what

kind of power it wants to become. Secondly, some of its leadership is preoccupied with a

strong anti-western bias, especially against the United States. The CPM parties for instance

launched a strong attack against the US-India nuclear deal in 2007. This area of policy and

ideational change within rising and emergent powers deserves greater research.

Agenda for Research on Emerging Powers

I do not offer a conclusive conclusion in this paper (as the paper is unfinished!) but try

to outline the issues and questions that must be addressed in order to do further research onthe BRICs and other emerging powers, as well as India’s rising potential. First, any analysis

of these countries must be conducted at two levels, one international or systemic and the other

country-level or unit analysis. We must also be able to assess the interactions between the

two levels for the relevant country. Second, the writing and research of foreign policies of

these powers must attend to how their aspirations for global power are affecting each of their

bilateral relationships. Third, the ideas, activities of the erstwhile powers –US, and EU—

bears special attention as their actions within the web of their own global ambitions creates

and imagines the rise of these new powers. Fourth, we lack good theories of what translates

potential into power and what translates economic progress into actual power. Underlying

this is another problem: We need new indices of power to encompass the phenomenal global

inter-dependence of the world; no country can be understood as an isolated entity anymore.

Perhaps we need a relational notion of power where power is not understood in a zero-sum

way but rather conceptualized as a win-win way. Fifth, the ideational basis of these new

emerging powers is quite different from that of the classic powers and we need to pay special


26/26

attention to the strategic and intellectual traditions that shapes their aspirations. Lastly, is the

issue of distributional conflict in the global system. Will the rise of these new powers

execrable conflict amongst the secondary powers? The rise of these new powers generates a

new research agenda both for comparative studies of Emerging Powers, international relations

and American politics.

india: rising power or a mere revolution of rising expectations?: india as a new

Documents