The speedy growth of India’s information technology (IT) sector during the 1990s put India in the limelight, with analysts worldwide claiming that India was on its way to becoming a global superpower with its giant, cheap labor pool, trained English speakers and considerable expertise in the IT industry. The then-ruling Bharatiya Janata Party coined the term “Shining India” to mark India’s ascent into the developed world, leading popular Western journalists to clamor over the idea that a McDonald’s made Bangalore the next San Francisco.

India simply suffers from one too many structural deficiencies to even come within sight of superpower status. Though the West quite naturally views liberal democracies positively, the Indian democracy is a different story. Split across geographic, economic, linguistic, cultural, religious, political and ideological lines, India is incapable of coordinating and implementing high-level policy among the national, regional and local governments. The country is still in a deep struggle over how to accelerate growth in the IT sector, while India’s agricultural sector, which employs more than 60 percent of the country’s labor force and grows annually at a staggeringly low rate, continues to lag behind. Add to that rampant corruption and a bloated bureaucracy, and any chance of lifting India’s infrastructure from its sorry state of affairs in even premier cities like Bangalore is near impossible.

And it gets worse. India is in a dire energy situation. Already, companies in India have grown accustomed to hours-long blackouts, especially in the hot summer months. But with crude prices soaring, India’s energy dilemma is coming to a head with blackouts becoming longer and more frequent and state refiners buckling under pressure, and the government is doing anything it can to avoid riots over fuel shortages. With growth slipping, inflation soaring and food prices increasing, India is in a difficult spot in managing the effects of the global commodity crisis.

 And then there is the security angle. India suffers from a wide array of militant threats, including an energized Maoist-influenced Naxalite movement running from the northeastern Indian state of Bihar to the southern state of Andhra Pradesh, a mix of separatist insurgencies in the bottlenecked northeast and an Islamist militant movement concentrated in Kashmir with cells sprinkled throughout India’s major urban areas.

Though the Indian Intelligence Bureau (IB) is among the top in the world when it comes to its ability to conduct surveillance, the IB still has its shortcomings when it comes to infiltrating militant groups and coordinating counterterrorism operations across state lines. The Naxalite movement, while concentrated in the more rural (and mineral-rich) areas of India, has proven quite adept at circumventing India’s security apparatus and is thriving on the government’s inability to manage land disputes between displaced villagers and corporations struggling to get their investments off the ground in India.

The current Bangalore/Ahmedabad blasts and came less than a year after a series of explosions hit the city of Hyderabad, Bangalore’s twin IT hub. These two attacks, though both amateurish in nature, reveal a gradual shift in Kashmiri Islamist militant cells’ operations toward a more strategic targeting of India’s prized IT sector — something that we have long been expecting. Though IT installations were not specifically targeted in the Bangalore and Hyderabad attacks, the fact that these two cities are on the militants’ radar is enough cause for concern for multinational corporations (MNCs) operating in India.

Around 40 percent of the country’s IT sector is concentrated in Bangalore, where around 36 percent of the country’s computer software is exported. A large number of MNCs are located in this IT hotbed, including Microsoft, Dell, Applied Materials, National Instruments, GM, Google, Goldman Sachs, Honeywell, Intel and IBM. Most foreign IT companies operate on campuses in the city outskirts of Bangalore and Hyderabad. Their locations allow controlled access to the campus buildings, greater standoff distance and concentric rings of security around the main buildings to better immunize these companies from an outside attack. That said, there are growing indications that Islamist militant groups are focusing their recruiting efforts on employees working within the IT industry, thus raising the threat of an attack being facilitated from the inside.

A number of foreign investors have already begun second-guessing their cost-benefit analysis of setting up shop in India after getting a rude awakening of what it means to do business in a country where communal riots, infrastructural breakdowns, abrupt changes in regulation and militant attacks are a constant worry. The country’s biggest strength is that it has a large pool of English speakers willing to work for low wages. The problems with this model are that wages in the IT sector are rising; many IT companies have grown weary of dealing with customer complaints who find Indian customer service intolerable; and pouring additional money into securing these IT campuses is undermining the cost-effectiveness of doing business in India. Furthermore, setting up call centers requires a relatively low amount of foreign direct investment, making it a lot less painful to pack up and relocate to more favorable investment climates, like Israel, Ireland or Indiana.

India is unlikely to experience a mass exodus of investment from the companies that have already absorbed the cost of doing business in the country. But developments such as the Bangalore and Ahmedabad blasts are bound to have a negative effect on future investment into the country, taking more of the shine off the Indian success story.

A US state department report has put India at the top of the list of countries worst afflicted by terrorism.

It says that India had more than 2,300 terrorism-related deaths in 2007 - about 10% of a worldwide figure of 22,000 terrorism-related deaths that year.

That is an astonishing number considering many of those 22,000 worldwide deaths occurred in Iraq and Afghanistan where wars are being fought.

It's not just the Islamic jihadis but also separatists like the United Liberation Front of Assam (Ulfa) and Maoist rebels in India who use serial bombings on a regular basis.

The US report also questioned India's "outdated and out burdened law enforcement and legal systems".

"Until we modernise our intelligence gathering and hold it publicly accountable, we cannot win the fight against terrorism," says Amiyo Samanta, a former Intelligence Bureau joint director and retired chief of police intelligence in West Bengal state.

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