India: rising Asian economic superpower.

• Author: Howell, Llewellyn D.

BESET BY ETHNIC CONFLICT again in 1992, India entered American attention by its usual back-door route, through media reports on the extensive poverty and homelessness in cities such as Calcutta and Bombay or religious turmoil among Hindus, Muslims, Sikhs, and others. Such conflict, like all of India, is of epic proportions. Americans in particular seem to know most about that country through romantic films such as "Jewel in the Crown" or, for those who remember the Cold War, memories that register the long-standing relationship between India and the Soviet Union. For all, the sluggishness of the Indian bureaucracy is renowned.

Through the 1950s, the nation continued with policies of centralization and government control of at least the major industries. Still in the anti-colonialist mode into the 1960s, import-substitution, rather than a globally oriented export strategy, was the key to business policy. American support for Pakistan in the 1970s and 1980s left even the Indian critics of centralized and inward-directed business policy without sympathy when they argued for a more market-directed and Western approach.

Prime Minister Rajiv Gandhi began changes in the last half of the 1980s when he sought to bring India into the technology oriented era, proposing reforms in licensing and foreign exchange regulations. Despite some successes, many of these were superficial and made little headway in bringing this clumsy giant into the modern industrial world.

Only once it had become clear that the Soviet Union was no beacon for centralization and after the multiple failures of socialist and bureaucratic structuring worldwide has India been able to free itself from self-imposed constraints. Its exporters, as well as the international business community, hailed the beginning of trade liberalization on the part of newly elected Prime Minister P.V. Narasimha Rao in July, 1991. His efforts continue with considerable enthusiastic support, although doubts remain whether they can be sustained permanently, given India's long economic history and entrenched bureaucracy.

In the meantime, there are some significant attributes of this long-ignored nation that Americans need to consider. Most importantly, India is the world's largest democracy and continues to function as such despite its huge population and numerous ethnic, religious, and class divisions. From a business perspective, this openness is critical to the prospects for access and growth.

Second, its...