India's States and the Making of Foreign Economic Policy: The Limits of the Constituent Diplomacy Paradigm

This article assesses the extent to which shifts in India's economic policy stance, and in the nature of economic sovereignty in the contemporary world, are combining to enhance the role of state governments in the making of India's foreign economic policy. Because of states' high-profile investment-promotion activities, it is tempting to classify India as a case of what has been called “constituent diplomacy,” the increasingly direct engagement of subnational units in international affairs. But this would be to understate the central government's continued role in managing such important policy matters as external borrowing (from private and multilateral sources) and the regulation of core infrastructure sectors, including electricity, where despite states' key roles, the central government maintains control over certain critical decisions.