When did India begin to reintegrate with the world economy? When did the Indian state begin to embrace the market again? Much confusion prevails in the academic discourse on these questions. The confusion derives from a belief that the questions are necessarily related. They are not. The reintegration did not stem from any formally announced reforms. In fact, the reintegration began informally, in the late 1970s, when two trends came together, an accumulation of capital and competitiveness in small-scale labor-intensive industry, and an unannounced easing of the value of the Indian currency. The exporting opportunities that the latter step created were utilized by the former group. An official reform that extended to all aspects of trade and investment policy did not happen before 1992. Its effects encompassed foreign investment, import of technology, and export of knowledge-based industry in the 2000s. The door that was opened slightly in the late 1970s was now fully ajar.

The precise contents of the economic liberalization process announced for 1992–95 were similar to “structural adjustments” elsewhere in a developing world burdened with bankrupt governments and unsustainable balances of payments. Exchange rates were formally devalued. Tariffs were reduced. A basketful of industrial regulations was removed. The government stepped away from business commitments, a move resisted by the organized trade unions. The broad result, nevertheless, was market integration at all levels, and a fall in the size of the government in the national economy, in short, a return to the nineteenth-century liberal ideal.