In the wake of the terrorist attacks on Mumbai in November 2008, India enacted new and tougher anti-terrorism laws that took effect in 2009—the Unlawful Activities (Prevention Amendment Act of 2008 (UAPA), and the National Investigation Agency Act of 2008 (NIA). This paper examines the current challenges facing the Indian Government in the implementation of these laws, in light of India's experience with the Prevention of Terrorism Act of 2002 (POTA).We analyze how POTA, a law originally designed to protect the Indian nation as a whole from extraordinary terrorist threats, was instead captured by state-level political elites and wielded as a weapon against rival political groups. We argue that this dynamic can be explained by the broader political transformation in the federalist structure of the Indian polity that occurred in the 1990s: the fragmentation and decline of Congress party control over the Central Government allowed state and regional parties, and state governments, to claim more and more power at the expense of the Center. An∼examination of case studies in the Indian states of Jharkhand, Uttar Pradesh, and Gujarat illustrates the dynamics of local capture and the deployment of anti-terrorist legislation by elites against economic challenges. Through an analysis of the implementation of POTA, this paper seeks to contextualize India's latest round of anti-terrorism laws in light of the structural realities of the Indian polity.