Rushdie started it. And it won't stop

If you want to be ahead of the literary game this year, practise getting your jaws around the following syllables: Raj Kamal Jha. The young man with a haircut like Hendrix's but slightly sat upon, a dark and brooding gaze glinting through the fringe, has been ordained the Next Big Thing in Indian fiction, following the unprecedented global success of Arundhati Roy's The God of Small Things. Raj Kamal Jha's first novel The Blue Bedspread, in which an old man in a Calcutta backstreet unravels the dark secrets of his life in precise yet bewitching prose, has not been published yet, but the signs are clear.

Rights have been sold in eight foreign languages. In the US it is to be published by Random House, the first Indian book the company has taken on since The God of Small Things, despite having been flooded with manuscripts. And although it is not published in India until April, and in Britain until June, Picador chose to advertise the book on its launch list in Delhi last week, and put the author on display for the delectation of the trade.

Picador arrived in India last week with a splash, scattering posters and paperback bins of their first four titles around the country, and packing the auditorium at the British Council in Delhi, the same space where, 22 months ago, Arundhati Roy launched The God of Small Things on its amazing journey.

It was the latest and strongest signal yet that Indian writing has arrived on the world stage, and is not going to go away. Peter Straus, the head of Picador, spelled out the milestones along the way: the explosive and revolutionary impact, back in 1981, of Rushdie's Midnight's Children, which went on to win the Booker; Rohinton Mistry becoming the only writer to be shortlisted for the Booker for both his first and second books; Vikram Seth's A Suitable Boy becoming the bestselling novel of the year in the UK in 1993; Midnight's Children being named Booker of Bookers.

Finally and most conclusively there has been The God of Small Things. The bittersweet story of Estha and Rahel and Sophie Mol, the twisting and untwisting of the threads of memory amid the heat and damp of Kerala, has triumphed all over the world. It has become the first Indian book to crack the New York Times bestseller list. In Britain, after winning the Booker and selling in hardback and in paper, it has attracted the true accolade of being gratuitously savaged by a member of the literary establishment (in Prospect), a sure sign that it is a force to reckon with. But for Picador and other publishers, just as significant as all these indicators is the fact that the book sold nearly 100,000 copies in hardback in India.

Picador, whose parent company Macmillan has been in India for nearly 150 years, woke up to the fact that suddenly a large number of Indians were buying books. "It's a lot to do with economics," says Peter Straus. "The middle class have got richer, so publishers can maximise their sales, seeing that there is a growing and eager readership." When Seth's A Suitable Boy was published in India, it sold only 7,000 copies in hardback. "If it was published now," says Straus, "it would sell a lot more than that. Arundhati Roy's book has given a new confidence to Indian publishers about the size of their market."

That is what Picador India is gambling on - and as the parent company is so well dug in, it is not a frightening punt. But the size of the Indian book-buying market, actual and potential, is one of the subcontinent's enduring mysteries. The population of India which speaks English fluently is reckoned to be 16 to 20 million - barely 2 per cent of the population, but including a preponderance of the middle and upper classes. If 10 per cent of them bought books, that would be a sizeable market - some 2 million people. But according to David Davidar, the founding chief executive of Penguin India, Picador's most serious competitor, "The book-buying public does not exceed 100,000 at any given time." At a meeting with Peter Straus in Delhi, Davidar was keen to puncture the idea that India represented a vast, practically untapped market.

This is the same difficulty and confusion that has bedevilled all the foreign firms that have entered India since the onset of economic reform eight years ago. Estimates of the Indian middle class go as high as 300 million; the Delhi-based national Council of Applied Economic Research believes that 500 million Indians have enough spare cash to shop for non- essential items. But when firms try to sell to them as they would to middle- class markets elsewhere, they learn that they may be middle class in education, culture and social status, but fall down in one crucial respect: they have no money.

This is changing, but like most things in India, very slowly. The God of Small Things has altered the landscape, coaxed many more people into shelling out for a literary novel, and opened up new selling channels; Arundhati Roy herself tells of being approached in her car at a traffic light by a hawker offering paper tissues, women's monthly magazines, and a bootleg copy of The God of Small Things. (She bought it.) But the problem in India is always the same: infrastructure.

Outside the major cities, bookshops barely exist. Even within them, they are few, small and primitive by European standards.

So Picador may not make a mint. But the arrival of Britain's grooviest imprint (Rushdie's publisher in paperback since Midnight's Children) can only enrich a literary culture which is gaining in confidence year by year.

It is easy to forget that as recently as 25 years ago, when Commonwealth writers such as V S Naipaul, Wole Soyinka and Derek Walcott were already well established, Indian literary fiction meant the ageing R K Narayan, the Heat and Dust of Ruth Prawer Jhabwala, who was not an Indian, and little else. With Rushdie, critics decided that India had found her voice: but the multiplicity and heterogeneity of talent that have arisen since then have confounded attempts to cram Indian writers into a box labelled Oriental Magic Realism.

Some are lush and rich and referential, like Roy; some idiosyncratically spare and allusive like Amit Chaudhuri (whose much-praised Freedom Song is on Picador India's launch). Raj Khamal Jha writes like an Indian Raymond Carver. The Peter Sellers accents of G V Desani's hilarious classic All About H. Hatterr (recently reissued here) have given way to a thronging of different voices, reflecting the fact that, in literature as in all things, India is not a country but a world.

And now even the Indian vernacular languages are beginning to make themselves heard in the world. In the New Yorker, Salman Rushdie ventured the opinion that the best modern Indian writing was in English. This caused a predictable storm in India, but was excusable. Until lately vernacular writing in India has been very much the poor relation: amateurishly published, feebly distributed, often poorly translated. Now even that is changing. Penguin India is publishing more translations; Picador India has vowed to do the same.

For inspiration they can look to an extraordinary non-profit company called Katha, which has begun to salvage the lost classics of modern India, translating them into English with flair and publishing them in beautiful editions. The executive director of Katha, Geeta Dharmarajan, says she was inspired by the global success of the translated works of the likes of Marquez, Borges and Kawabata.

It may be some years before names like that of the incandescent Kerala fabulist Vaikom Muhammad Basheer or the spooky Urdu short-story writer Naiyer Masoud, both published by Katha, reverberate in the wine bars of Bloomsbury and send publishers and agents beetling across the globe for a piece of the action. But it's bound to happen.