India is now making the uneasy transition from the rule of the rubber stamp to the power of the silicon tag. For now, the forces of modernization have the upper hand, but the battle is far from over.

When I say rubber stamp, I mean it literally. In fact, our recent trip to India hinged on it. We were required to stamp our application for permission to shoot at the Taj Mahal with the official NBR seal. When we told our India producer Sanjay Jha that we did not have an official seal, he said “Yes, I know. But they don’t care. You have to make something up.”

So, we rushed an order to a local stamp maker. This is Washington, after all, and it is still possible to find a rubber stamp ASAP. In a few days, our faux official seal was ready, our application rubber-stamped, and the Indian bureaucracy satisfied.

It was our first welcome to what Indian’s call the “License Raj.” It is the gauntlet of licenses, officials, rules – written and unwritten – and open palms that must be run in order to get many things done in India.

Created first by the British, who wanted an authoritarian government to implement the colonial will, the License Raj was perfected by the Indians after independence. Jawaharlal Nehru, India’s first Prime Minister, chose to follow the Soviet model of development. After all, the Russians had transformed an agrarian nation into an industrial powerhouse, without falling victim to the Great Depression. So, in 1947, India decided central planning was in, and the private sector was suppressed. Professional bureaucrats ruled from the center.

The rubber stamp ran India for more than 50 years. But growth faltered in the early 90s, and a nearly bankrupt country was forced to loosen the economic reins. And that’s where the RFID tag begins to enter the picture. At Infosys, one of India’s IT powerhouses, they are rolling out Radio Frequency Identification technology – RFID for short – that will allow someone in Bangalore to monitor shipments in Bangor, Maine. As the price of silicon chips falls, it is now possible to insert these tracking chips in almost any package. Open a box containing an arterial stent in a hospital somewhere, and the RFID tag will tell a computer anywhere that it’s time to issue a bill.

As you can imagine, the world of the RFID tag – global, decentralized, fast-moving – is everything the world of the rubber stamp is not. The question is how fast India can make this transition. There are many barriers. For all the talk of an educated workforce, India is clearly not doing enough to train the people it needs to operate in the RFID world. (See our story on Thursday about this.) Water systems, roads and electricity networks are all woefully inadequate. (That’s tomorrow’s story) And a rubber stamp government is hard pressed to keep up with the demands of the fast-growing RFID economy.

Even more worrisome: the 800 million Indians who live on less than $2 a day and are being left behind in the race to build a globally competitive, high-tech Indian economy. A violent Maoist insurgency is raging across large swaths of India. Farmers have been killed in clashes with police over plans to build industrial zones. For now, analysts assured me the discontent is manageable, and not a destabilizing factor to India’s growth story. But it bears watching. (You can learn more about this by watching our "India's Promise" Memorial Day special.)

I left India immensely impressed by the entrepreneurial drive of the people building the RFID economy. But the License Raj had the last say. At the airport in Mumbai, the customs official refused to let our luggage leave the country until we had paid him $100 for his “help.” Finally, just after midnight, with our flight about to board, we dropped the high-minded refusals and bowed to the realities of the License Raj. Safely back in the US, we lodged a protest and were told the offending officer was reassigned. It was a messy, but important reminder that the License Raj will not go quickly or without exacting its price.